EconPapers    
Economics at your fingertips  
 

Investment externalities in models of fire sales

Pablo Kurlat

Journal of Monetary Economics, 2021, vol. 122, issue C, 102-118

Abstract: Two alternative models of fire sales that yield the same aggregate predictions have different normative implications. If fire sales result from marginal misallocation, a pecuniary externality leads to ex-ante overinvestment. If they result from asymmetric information, the overinvestment result is reversed. However, there may be a tradeoff between present and future underinvestment. Ex-ante macroprudential policy may need to treat different types of investment differently, but ex-post intervention is useful in both cases.

Keywords: Fire sales; Pecuniary externality; Asymmetric information (search for similar items in EconPapers)
JEL-codes: D62 D82 G14 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393221000805
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:122:y:2021:i:c:p:102-118

DOI: 10.1016/j.jmoneco.2021.07.005

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-01-15
Handle: RePEc:eee:moneco:v:122:y:2021:i:c:p:102-118