The Leverage Cycle
Equilibrium determines leverage, not just interest rates. Variations in leverage cause fluctuations in asset prices. This leverage cycle can be damaging to the economy, and should be regulated.
|Date of creation:||Jul 2009|
|Date of revision:||Jan 2010|
|Publication status:||Published in D. Acemoglu, K. Rogoff and M. Woodford, eds., NBER Macroeconomics Annual 2009. Chicago: University of Chicago Press, vol. 24, pp. 1-65|
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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6455, National Bureau of Economic Research, Inc.
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328, Federal Reserve Bank of New York.
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NBER Working Papers
12939, National Bureau of Economic Research, Inc.
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- Brunnermeier, Markus K & Pedersen, Lasse Heje, 2007. "Market Liquidity and Funding Liquidity," CEPR Discussion Papers 6179, C.E.P.R. Discussion Papers.
- Gromb, Denis & Vayanos, Dimitri, 2002.
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- Denis Gromb & Dimitri Vayanos, 2002. "Equilibrium and welfare in markets with financially constrained arbitrageurs," LSE Research Online Documents on Economics 448, London School of Economics and Political Science, LSE Library.
- Bengt Holmstrom & Jean Tirole, 1994.
"Financial Intermediation, Loanable Funds and the Real Sector,"
95-1, Massachusetts Institute of Technology (MIT), Department of Economics.
- Holmstrom, Bengt & Tirole, Jean, 1997. "Financial Intermediation, Loanable Funds, and the Real Sector," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 663-91, August.
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- Ana Fostel & John Geanakoplos, 2004.
"Collateral Restrictions and Liquidity Under-Supply: A Simple Model,"
Cowles Foundation Discussion Papers
1468R, Cowles Foundation for Research in Economics, Yale University, revised Aug 2006.
- Ana Fostel & John Geanakoplos, 2008. "Collateral restrictions and liquidity under-supply: a simple model," Economic Theory, Springer, vol. 35(3), pages 441-467, June.
- Ricardo Caballero & Arvind Krishnamurthy, 2000.
"International and Domestic Collateral Constraints in a Model of Emerging Market Crises,"
NBER Working Papers
7971, National Bureau of Economic Research, Inc.
- Caballero, Ricardo J. & Krishnamurthy, Arvind, 2001. "International and domestic collateral constraints in a model of emerging market crises," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 513-548, December.
- John Geanakoplos & Ana Fostel, 2008. "Leverage Cycles and the Anxious Economy," American Economic Review, American Economic Association, vol. 98(4), pages 1211-44, September.
- John Geanakoplos & Felix Kubler, 2004. "Leverage, Incomplete Markets and Crises," 2004 Meeting Papers 557, Society for Economic Dynamics.
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