important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), the economy …We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to … projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral …

important dynamic implications. During credit booms driven by high collateral values (e.g. real estate booms), the economy …We develop a new theory of information production during credit booms. In our model, entrepreneurs need credit to … projects. In equilibrium, the collateralization-screening mix depends on the value of aggregate collateral. High collateral …

How do housing bubbles affect other economic sectors? We show that in the presence of collateral constraints, a bubble … initially raises housing credit demand and crowds out credit to non-housing firms. If the bubble lasts, however, housing credit … repayments raise banks' net worth and expand credit supply, so that crowding-out eventually gives way to crowding-in. This is …

and the 2010-2012 European sovereign crisis. This effect is attenuated for banks with lower credit risk, sounder capital …