Bubbly Liquidity

Emmanuel Farhi and Jean Tirole

The Review of Economic Studies, 2012, vol. 79, issue 2, 678-706

Abstract: This paper analyses the possibility and the consequences of rational bubbles in a dynamic economy where financially constrained firms demand and supply liquidity. Bubbles are more likely to emerge, the scarcer the supply of outside liquidity and the more limited the pledgeability of corporate income; they crowd investment in (out) when liquidity is abundant (scarce). We analyse extensions with firm heterogeneity and stochastic bubbles. Copyright 2012, Oxford University Press.

Date: 2012
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Related works:
Working Paper: Bubbly Liquidity (2011)
Working Paper: Bubbly Liquidity (2011)
Working Paper: Bubbly Liquidity (2011)
Working Paper: Bubbly Liquidity (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:79:y:2012:i:2:p:678-706

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