Asset bubbles, collateral, and policy analysis
Jianjun Miao (),
Pengfei Wang () and
Journal of Monetary Economics, 2015, vol. 76, issue S, S57-S70
This paper provides a theory of credit-driven asset bubbles in an infinite-horizon production economy. Entrepreneurs face idiosyncratic investment distortions and credit constraints. An intrinsically useless asset such as land serves as collateral for borrowing. A land bubble can form because land commands a liquidity premium. The land bubble can provide liquidity and relax credit constraints, but can also generate inefficient overinvestment. Its net effect is to reduce welfare. Property taxes, Tobin's taxes, macroprudential policy, and credit policy can prevent the formation of a land bubble.
Keywords: Land bubbles; Credit constraints; Margins; Tax policies; Liquidity; Multiple equilibria; Welfare (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:76:y:2015:i:s:p:s57-s70
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 Dana Niculescu ().