Understanding bubbly episodes
Over the last two decades U.S. aggregate wealth has fluctuated substantially. Against the backdrop of the Great Recession, the effects of these boom-and-bust cycles have come to dominate academic and policy discussions. How can we explain these fluctuations in wealth? Why are these fluctuations associated with changes in consumption, investment and output? In this note, we argue that answers to these questions entail the addition of two ingredients to existent macroeconomic models: rational bubbles and financial frictions. We explain why each of these building blocks is crucial to understand recent events and how they can be seamlessly integrated in standard models
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- John Moore & Nobuhiro Kiyotaki, .
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- Martin, Alberto & Ventura, Jaume, 2010.
"Theoretical Notes on Bubbles and the Current Crisis,"
CEPR Discussion Papers
8038, C.E.P.R. Discussion Papers.
- Alberto Martin & Jaume Ventura, 2011. "Theoretical Notes on Bubbles and the Current Crisis," IMF Economic Review, Palgrave Macmillan, vol. 59(1), pages 6-40, April.
- Alberto Martin & Jaume Ventura, 2010. "Theoretical notes on bubbles and the current crisis," Economics Working Papers 1222, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2011.
- Alberto Martin & Jaume Ventura, 2010. "Theoretical Notes on Bubbles and the Current Crisis," NBER Working Papers 16399, National Bureau of Economic Research, Inc.
- Alberto Martin and Jaume Ventura, 2010. "Theoretical Notes on Bubbles and the Current Crisis," Working Papers 519, Barcelona Graduate School of Economics.
- Martin, Alberto & Ventura, Jaume, 2011. "Theoretical notes on bubbles and the current crisis," Working Paper Series 1348, European Central Bank.
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- repec:oup:restud:v:56:y:1989:i:1:p:1-19 is not listed on IDEAS
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