To access the full text documents, please follow this link: http://hdl.handle.net/10230/6360

Theoretical notes on bubbles and the current crisis
Martin, Alberto; Ventura, Jaume
Universitat Pompeu Fabra. Departament d'Economia i Empresa
We explore a view of the crisis as a shock to investor sentiment that led to the collapse of abubble or pyramid scheme in financial markets. We embed this view in a standard model of thefinancial accelerator and explore its empirical and policy implications. In particular, we show howthe model can account for: (i) a gradual and protracted expansionary phase followed by a suddenand sharp recession; (ii) the connection (or lack of connection!) between financial and real economicactivity and; (iii) a fast and strong transmission of shocks across countries. We also use the modelto explore the role of fiscal policy.
2010-09-30
Macroeconomics and International Economics
bubbles
dynamic inefficiency
financial accelerator
credit constraints
financial crisis
pyramid schemes.
L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
http://creativecommons.org/licenses/by-nc-nd/3.0/es/
Working Paper
         

Show full item record

Related documents

 

Coordination

 

Supporters