framework we validate recent results in general equilibrium theory about endogenous leverage and its consequences for asset …

leverage by studying a model that simultaneously describes dynamic and equilibrium properties of the market. Rather than taking … important because the economics of leverage is key to the understanding of financial crisis. We find that simulated double … assets are traded at a price above fundamental value in the double auction. The equilibrium level of leverage also emerges in …

Fund managers respond to the payoff gradient by continuously adjusting leverage in our analytic and simulation models … been small for a long time, asset prices inflate as fund managers increase leverage. Then slight losses can trigger a crash …

and leverage – in the dynamics of asset prices. In this paper we use a prototypical “small-type” artificial financial …