Researchers have presented evidence that, at certain times in particular industries, initial public offerings (IPOs) of firms' stocks are underpriced. Several models have been developed that offer explanations of these "hot issue" markets; e.g. Baron's model (1982), in which investment bankers...

In recent years, there has been a large literature on how stock exchange specialists set prices when there are investors who know more about the stock than they do. An important assumption in this literature is that there are *liquidity traders* who are equally likely to buy or sell for...

Galí (2014) showed that a monetary policy rule that raises interest rates in response to bubbles can paradoxically lead to larger bubbles. This comment shows that a central bank that wants to dampen bubbles can always do so by raising interest rates aggressively enough. This result is different...