Money Is the Root of Asset Bubbles

Yu Awaya, Kohei Iwasaki and Makoto Watanabe

No 10923, CESifo Working Paper Series from CESifo

Abstract: This paper examines how monetary expansion causes asset bubbles. When there is no monetary expansion, a bubbly asset is not created due to a hold-up problem. Monetary expansion increases buyers’ money holdings, and then, dealers are willing to buy a worthless asset from sellers, in hopes of selling it to buyers who may not know that it is worthless—a bubble now occurs.

Keywords: bubbles; dealers; higher-order uncertainty; money (search for similar items in EconPapers)
JEL-codes: D82 D83 D84 E44 E52 G12 G14 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-mac and nep-mon
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Related works:
Working Paper: Money is the roof of asset bubbles (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10923

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