Bubbly Liquidity

Emmanuel Farhi and Jean Tirole

No 16750, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the possibility and the consequences of rational bubbles in a dy- namic economy where financially constrained firms demand and supply liquidity. Bub- bles are more likely to emerge, the scarcer the supply of outside liquidity and the more limited the pledgeability of corporate income; they crowd investment in (out) when liquidity is abundant (scarce). We analyze extensions with firm heterogeneity and sto- chastic bubbles.

JEL-codes: E2 E44 (search for similar items in EconPapers)
Date: 2011-01
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Published as Emmanuel Farhi & Jean Tirole, 2012. "Bubbly Liquidity," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 678-706.

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Related works:
Journal Article: Bubbly Liquidity (2012)
Working Paper: Bubbly Liquidity (2011)
Working Paper: Bubbly Liquidity (2011)
Working Paper: Bubbly Liquidity (2011)
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