Bubbly dynamics, frictional intermediation and policy analysis

Yaoju Liu and Chenxi Wang

Economics Letters, 2024, vol. 234, issue C

Abstract: We perform welfare analysis of time-varying capital requirement within a DNK model with rational asset bubbles. We show that the desired cyclicality of capital requirement and its interactive mechanism with monetary policy are both contingent on the roles of bubble assets in the economy.

Keywords: Asset bubble; Bank; Macroprudential policy; Store of value; Collateral (search for similar items in EconPapers)
JEL-codes: E32 E44 G21 G28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:234:y:2024:i:c:s0165176523005177

DOI: 10.1016/j.econlet.2023.111491

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