Aoki, Kosuke; Nakajima, Tomoyuki; Nikolov, Kalin - Center for Advanced Research in Finance, Faculty of … - 2014
We build a model economy in which a shortage of safe assets can create conditions for intrinsically useless 'safe' bubble assets to circulate at a positive price. Our environment features in nitely lived individuals who are not subject to credit constraints but who face uninsurable idiosyncratic...