We develop a model of temporary short-selling bans by extending the infinite-horizon speculative bubble model of Scheinkman and Xiong (2003). Our model predicts that a temporary short-selling ban leads to a price inflation that is the highest at the beginning of the ban and gradually converges...

We develop a model of temporary short-selling bans by extending the infinite-horizon speculative bubble model of Scheinkman and Xiong (2003). Our model predicts that a short-selling ban leads to a price inflation that is the highest at the beginning of the ban and gradually converges to zero at...