Asset Bubbles and Global Imbalances

Daisuke Ikeda and Toan Phan

American Economic Journal: Macroeconomics, 2019, vol. 11, issue 3, 209-51

Abstract: We analyze the relationships between bubbles, capital flows, and economic activities in a rational bubble model with two large open economies. We establish a reinforcing relationship between global imbalances and bubbles. Capital flows from South to North facilitate the emergence and the size of bubbles in the North. Bubbles in the north in turn facilitate South-to-North capital flows. The model can simultaneously explain several stylized features of recent bubble episodes.

JEL-codes: E32 E44 F44 G01 G14 O16 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mac.20140286
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Asset Bubbles and Global Imbalances (2020)
Working Paper: Asset Bubbles and Global Imbalances (2018)
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