Bubbles and Credit Constraints
- Jianjun Miaoy
- Pengfei Wangz
- We Thank Bruno Biais
- Toni Braun
- Markus Brunnermeier
- Henry Cao
- Christophe Chamley
- Tim Cogley
- Russell Cooper
- Douglas Gale
- Mark Gertler
- Simon Gilchrist
- Christian Hellwig
- Hugo Hopenhayn
- Boyan Jovanovic
- Bob King
- Nobu Kiyotaki
- Anton Korinek
- Felix Kubler
- Kevin Lansing
- Jean Tirole
- Jon Willis
- Mike Woodford
- Tao Zha
- Lin Zhang
- Wei Xiong
- Yi Wen
DOIAbstract
We provide an in\u85nite-horizon model of a production economy with credit-driven stock-price bubbles, in which \u85rms meet stochastic investment opportunities and face credit constraints. Capital is not only an input for production, but also serves as collateral. We show that bubbles on this reproducible asset may arise, which relax collateral constraints and improve investment e ¢ ciency. The collapse of bubbles leads to a recession and a stock market crash. We show that there is a credit policy that can eliminate the bubble on \u85r
Add to ORKG