Hirano, Tomohiro; Yanagawa, Noriyuki - Center for International Research on the Japanese … - 2012
This paper theoretically investigates the relationship between asset price bubbles and bailout. We show that although bailout may mitigate adverse e¤ects of bubbles' bursting ex-post, it is more likely to cause asset price bubbles by encouraging risk-taking behavior ex-ante. In other words,...