We develop a parsimonious model of bubbles based on the assumption of imprecisely known market depth. In a speculative … possibility of bubbles depending on the risk-free rate, uncertainty about market depth, and traders’ degree of leverage. This … allows us to discuss several policy measures. Bubbles always reduce aggregate welfare. Among others, certain monetary policy …

We develop a model of rational bubbles based on the assumptions of unknown market liquidity and limited liability of … condition for whether rational bubbles are possible. Based on this analysis, we discuss several widely-discussed policy measures … with respect to their effectiveness in preventing bubbles. A reduction of manager bonuses or a Tobin tax can create or …

speculative bubbles and/or noise trading behavior. Our empirical findings for the US stock market covering the 1871:1 - 2000 …

We introduce a model of super-exponential financial bubbles with two assets (risky and risk-free), in which …

is able to account for the development of endogenous bubbles and crashes. We distinguish three different regimes …’ opinions are idiosyncratic and no bubbles emerge. Around the critical value of the O(n) vector model, cross sectionally … asynchronous bubbles emerge. Above the critical value, small random price fluctuations may be amplified by noise traders herding …

Bubbles have become ubiquitous. This ubiquity has stimulated research over the past three decades into bubbles in … history. In this article, we provide a systematic overview of research into historical bubbles. Our analysis reveals that … there is no coherent approach to the study of bubbles and much of the debate has unhelpfully focussed on the rationality …

Speculation, in the spirit of Harrison and Kreps [1978], is introduced into a standard real business cycle model … generated by speculation for any model of beliefs - a factor of 1.5. A calibration based on diagnostic beliefs amplifies hours …

, thereby causing rational bubbles to lose their efficiency properties. Moreover, if speculation can be carried out by skilled …We study the macroeconomic effects of rational asset bubbles in an overlapping-generations economy where asset trading … are large, the private gains associated with trading asset bubbles may lead too many workers to become speculators …

We analyze a controlled price formation experiment in the laboratory that shows evidence for bubbles. We calibrate two … models that demonstrate with high statistical significance that these laboratory bubbles have a tendency to grow faster than …