Standard international macroeconomic models overpredict capital flows into countries with relatively lower capital stocks and faster-growing TFP. Asymmetric invest- ment risk has been shown in similar models to be a significant driver of capital flows between otherwise symmetric countries. But...

We provide a simple rational bubble model demonstrating that a concentration of income is necessary and sufficient for the existence of equilibria with risky speculative bubbles. Income concentration among top earners leads to excess savings and depressed interest rates, which facilitate the...

Climate change exacerbates environmental risks such as intensifying extreme precipitation and heat events. Urban design, in turn, can further amplify these background climate stressors through the well-known urban heat island and rainfall effects, which are largely controlled by the local...

We develop a simple model of defaultable debt and rational bubbles in the price of an asset, which can be pledged as collateral in a competitive credit pool. When the asset pledgeability is low, the down payment is high, and bubble investment is unleveraged, as in a standard rational bubble...