rational bubbles can exist in a growing economy. The existence of bubbles depends on the relative magnitudes of risk aversion … to consumption and to wealth. Furthermore, I examine how an exogenous shock in technology might trigger bubbles. …

. There is no uncertainty about economic fundamentals. Banking bubbles can emerge through a positive feedback loop mechanism …. Changes in household confidence can cause the collapse of bubbles, resulting in a financial crisis. Credit policy can mitigate … economic downturns but also incur an efficiency loss. Bank capital requirements can prevent the formation of banking bubbles by …

This paper proposes a framework to study contagious stock bubbles in a multi-sector production economy with … heterogeneous investment technologies. Due to financial frictions, stock bubbles arise endogenously that help inject additional … liquidity. Due to financial linkages, the existence of bubbles in different sectors may be interdependent. Theoretically, we …

that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the …

performance in a twofold way: fostering growth or pushing the economy into recession or crisis. The outcomes of our experiments …