Working Paper

Bubbles and Leverage: A Simple and Unified Approach


Abstract: In this paper, we lay out a simple framework that captures much of what the theoretical literature has to say about the role of credit in systemically important asset booms and busts. In addition, we suggest ways in which to incorporate physical investment in the bubble asset as well as monetary policy.

Keywords: asset pricing; heterogeneity; bubbles;

JEL Classification: E52; G12;

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Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2013-11-13

Number: WP-2013-21