Investment booms and asset "bubbles" are often the consequence of heavily leveraged borrowing and speculations of …

-selling constraints, speculation can generate overvaluation and speculative bubbles. Leverage can substantially inflate speculative … bubbles and leverage limits depend on perceived downside risks. Shifts in beliefs about downside tail scenarios can explain … the emergence and the collapse of leveraged speculative bubbles. Speculative bubbles are related to rational bubbles, but …

Galí (2014) showed that a monetary policy rule that raises interest rates in response to bubbles can paradoxically lead … to larger bubbles. This comment shows that a central bank that wants to dampen bubbles can always do so by raising … argue Galí's model contains additional equilibria in which more aggressive rules dampen bubbles. We show that for these …

We take a simple q-theory model and ask how well it can explain external financing anomalies, both qualitatively and …

We propose a theory of indebted demand, capturing the idea that large debt burdens by households and governments lower … aggregate demand, and thus natural interest rates. At the core of the theory is the simple yet under-appreciated observation …

It is well known that rational bubbles can be sustained in balanced growth path of a deterministic economy when the … return to capital r is equal to the growth rate g. When there is a lack of stores of value, bubbles can implement an … capital. Then, bubbles further efficiency, though they cannot implement first best. While bubbles can only be sustained when r …