Asset Bubbles and Global Imbalances
Daisuke Ikeda and
Toan Phan ()
No 18-7, Working Paper from Federal Reserve Bank of Richmond
We analyze the relationships between bubbles, capital flows, and economic activities in a rational bubble model with two large open economies. We establish a reinforcing relationship between global imbalances and bubbles. Capital flows from South to North facilitate the emergence and the size of bubbles in the North. Bubbles in the North in turn facilitate South-to-North capital flows. The model can simultaneously explain several stylized features of recent bubble episodes.
Keywords: Rational bubbles; global imbalances; financial frictions; credit boom (search for similar items in EconPapers)
JEL-codes: F32 F41 F44 (search for similar items in EconPapers)
Pages: 46 pages
New Economics Papers: this item is included in nep-fdg, nep-ifn and nep-opm
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Journal Article: Asset Bubbles and Global Imbalances (2020)
Journal Article: Asset Bubbles and Global Imbalances (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedrwp:18-07
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