On the Macroeconomics of Asset Shortages

Ricardo J Caballero ()

No 12753, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The world has a shortage of financial assets. Asset supply is having a hard time keeping up with the global demand for store of value and collateral by households, corporations, governments, insurance companies, and financial intermediaries more broadly. The equilibrium response of asset prices and valuations to these shortages has played a central role in global economic developments over the last twenty years. The so-called "global imbalances," the recurrent emergence of speculative bubbles (which recently have transited from emerging markets, to the dot-coms, to real estate, to gold...), the historically low real interest rates and associated "interest-rate conundrum," and even the widespread low inflation environment and deflationary episodes in parts of the world, all fall into place once one adopts this asset shortage perspective.

JEL-codes: E3 E4 E5 F3 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cba, nep-ias and nep-mac
Date: 2006-12
Note: EFG IFM AP
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