Theoretical notes on bubbles and the current crisis

We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and policy implications. In particular, we show how the model can account for: (i) a gradual and protracted expansionary phase followed by a sudden and sharp recession; (ii) the connection (or lack of connection!) between financial and real economic activity and; (iii) a fast and strong transmission of shocks across countries. We also use the model to explore the role of fiscal policy

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Year of publication:	2011
Authors:	Martin, Alberto ; Ventura, Jaume
Publisher:	European Central Bank
Subject:	Geldpolitik \| Monetary Policy \| Zentralbank \| Central Bank

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Extent:	1576960 bytes 46 p. application/pdf
Series:	Working paper series / European Central Bank ; 1348
Type of publication:	Book / Working Paper
Language:	English
Classification:	E32 - Business Fluctuations; Cycles ; E44 - Financial Markets and the Macroeconomy ; O40 - Economic Growth and Aggregate Productivity. General ; Currency. Monetary policy ; Individual Working Papers, Preprints
Source:	ArchiDok

Persistent link: https://www.econbiz.de/10009640837