The International Transmission of Credit Bubbles: Theory and Policy

Jaume Ventura and Alberto Martin

No 831, Working Papers from Barcelona School of Economics

Abstract: We live in a new world economy characterized by financial globalization and historically low interest rates. This environment is conducive to countries experiencing credit bubbles that have large macroeconomic effects at home and are quickly propagated abroad. In previous work, we built on the theory of rational bubbles to develop a framework to think about the origins and domestic effects of these credit bubbles. This paper extends that framework to include many countries and general preferences, and uses it to study how financial integration affects the properties of credit bubbles, how the latter are transmitted across countries, and the role of international policy coordination.

Keywords: Sudden Stops; Önancial globalization; international capital áows; credit bubbles; international policy coordination (search for similar items in EconPapers)
JEL-codes: E32 E44 O40 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-mac, nep-mon and nep-opm
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Citations: View citations in EconPapers (35)

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Related works:
Journal Article: The international transmission of credit bubbles: Theory and policy (2015)
Working Paper: The International Transmission of Credit Bubbles: Theory and Policy (2015)
Working Paper: The International Transmission of Credit Bubbles: Theory and Policy (2015)
Working Paper: The international transmission of credit bubbles: theory and policy (2015)
Working Paper: The international transmission of credit bubbles: theory and policy (2015)
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