Funding Externalities, Asset Prices And Investors' "Search For Yield"
This note presents a simple model that nests the “excess liquidity” and “savings glut” hypotheses of the debate on the recent asset price boom. It clarifies the notion of investors’ ‘search for yield’ and shows how financial frictions influence asset price dynamics.
|Date of creation:||Feb 2008|
|Date of revision:|
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- Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2003.
"An Essay on the Revived Bretton Woods System,"
NBER Working Papers
9971, National Bureau of Economic Research, Inc.
- Blanchard, Olivier J, 1981. "Output, the Stock Market, and Interest Rates," American Economic Review, American Economic Association, vol. 71(1), pages 132-43, March.
- Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 651-667.
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