union. By employing a calibrated two-country New Keynesian DSGE model with collateral constraints tied to housing values, we …

output comes from an unusual regime. -- Bubbles ; fiscal theory of the price level ; collateral constraints ; neutrality …This paper proposes and tests a theory of credit-driven asset bubbles which are neutral in their real effects. When a … lender such as a government, central bank, or banking sector is willing to lend infinitely against collateral, explosive …

general equilibrium in finite-horizon economy with heterogeneous agents and collateral constraints. There are two assets in … the economy which can be used as collateral for short-term loans. For the first asset the margin requirement is … presence of collateral constraints leads to strong excess volatility. Thus, a regulation of margin requirements may have …