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Theoretical Notes on Bubbles and the Current Crisis

Martin, Alberto; Ventura, Jaume - C.E.P.R. Discussion Papers - 2010

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...

Persistent link: https://www.econbiz.de/10008684673

Bubbles and Central Banks: Historical Perspectives

Brunnermeier, Markus K; Schnabel, Isabel - C.E.P.R. Discussion Papers - 2015

This paper reviews some of the most prominent asset price bubbles from the past 400 years and documents how central … banks (or other institutions) reacted to those bubbles. The historical evidence suggests that the emergence of bubbles is … also suggests that a purely passive “cleaning up the mess” stance toward the buildup of bubbles is, in many cases, costly …

Persistent link: https://www.econbiz.de/10011249380

Two Monetary Tools: Interest Rates and Haircuts

Ashcraft, Adam; Garleanu, Nicolae Bogdan; Pedersen, … - C.E.P.R. Discussion Papers - 2010

We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the...

Persistent link: https://www.econbiz.de/10008642875

Collateralisation bubbles when investors disagree about risk

Broer, Tobias; Kero, Afroditi - C.E.P.R. Discussion Papers - 2014

about mean payoffs, price bubbles arise without collateralisation, which may discipline prices as pessimists demand higher …

Persistent link: https://www.econbiz.de/10011084220

Riding the South Sea Bubble

Temin, Peter; Voth, Hans-Joachim - C.E.P.R. Discussion Papers - 2004

The efficient markets hypothesis implies that, in the presence of rational investors, bubbles cannot develop. We …

Persistent link: https://www.econbiz.de/10005136583

Optimal capital requirements over the business and financial cycles

Malherbe, Frédéric - C.E.P.R. Discussion Papers - 2015

I propose a simple theory of intertwined business and financial cycles, where financial regulation both optimally …

Persistent link: https://www.econbiz.de/10011165665

The Great Mortgaging: Housing Finance, Crises, and Business Cycles

Jordà, Òscar; Schularick, Moritz; Taylor, Alan M. - C.E.P.R. Discussion Papers - 2014

This paper unveils a new resource for macroeconomic research: a long-run dataset covering disaggregated bank credit for 17 advanced economies since 1870. The new data show that the share of mortgages on banks’ balance sheets doubled in the course of the 20th century, driven by a sharp rise of...

Persistent link: https://www.econbiz.de/10011083232

Never Say Never: Commentary on a Policymaker’s Reflections

Obstfeld, Maurice - C.E.P.R. Discussion Papers - 2014

intellectual leader on macroeconomic theory and policy. He confronted numerous emerging market crises, including the globally …

Persistent link: https://www.econbiz.de/10011083383

Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone

Martin, Philippe; Philippon, Thomas - C.E.P.R. Discussion Papers - 2014

We provide a first comprehensive account of the dynamics of Eurozone countries from the creation of the Euro to the Great recession. We model each country as an open economy within a monetary union and analyze the dynamics of private leverage, fiscal policy and spreads. Our parsimonious model...

Persistent link: https://www.econbiz.de/10011084051

Gambling for resurrection in Iceland: the rise and fall of the banks

Baldursson, Fridrik Mar; Portes, Richard - C.E.P.R. Discussion Papers - 2013

We examine the evolution of the Icelandic banking sector in its macroeconomic environment. The story culminates in the crisis of October 2008, when all three major banks in Iceland collapsed in three successive days. The country is still struggling to cope with the consequences. The paper...

Persistent link: https://www.econbiz.de/10011084274