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The Leverage Cycle

John Geanakoplos ()
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John Geanakoplos: Cowles Foundation, Yale University, http://economics.yale.edu/people/john-geanakoplos

No 1715R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Equilibrium determines leverage, not just interest rates. Variations in leverage cause fluctuations in asset prices. This leverage cycle can be damaging to the economy, and should be regulated.

Keywords: Leverage; Collateral; Cycle; Crisis; Regulation (search for similar items in EconPapers)
JEL-codes: E3 E32 G01 G12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cba, nep-mac and nep-reg
Date: 2009-07, Revised 2010-01
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Published in D. Acemoglu, K. Rogoff and M. Woodford, eds., NBER Macroeconomics Annual 2009. Chicago: University of Chicago Press, vol. 24, pp. 1-65

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