Literatures About Asset Price Bubbles

Babaei Semirumi ()
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Babaei Semirumi: Payam Noor University (PNU), Iran
Authors registered in the RePEc Author Service: Mohammad Reza Babaei Semiromi ()

Annals - Economic and Administrative Series -, 2012, vol. 6, issue 1, 35-55

Abstract: A bubble is the difference between an asset's fundamental value and its market price.. Some researchers have defended the idea that it is possible that asset price bubbles moderate the effects of financial market frictions, like credit constraints and improve the allocation of investment, despite the occasional busts. Since asset prices affect the real allocation of an economy, it is important to understand the circumstances under which these prices can deviate from their fundamental. Strong regulatory and supervisory institutions are always the best line of defense. In this context, maintaining the credibility and reputation of the central bank so that it will be able to carry out its core function maintaining macroeconomic stability is essential.

Keywords: Asset price bubbles; monetary policies; expectations; Macroeconomic (search for similar items in EconPapers)
Date: 2012
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