Derviz, Alexis - In: Czech Journal of Economics and Finance (Finance a uver) 61 (2011) 1, pp. 92-116
We study the consequences of equity mispricing (a bubble) and the correction thereof (the bubble bursting) for real activity in a production economy. In our model, producers are financed by both bank debt and equity, and face a mix of systemic and idiosyncratic uncertainty. Positive/negative...