Journal Article

Economic theory and asset bubbles


Abstract: The author summarizes what economic theory tells us about when asset price bubbles can occur and what the welfare implications are from bursting them. In some cases, bursting a bubble may make society worse off by exacerbating the market distortions that give rise to the bubble in the first place.

Keywords: Asset-liability management; Asset pricing;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Economic Perspectives

Publication Date: 2007

Volume: 31

Issue: Q III

Pages: 44-59