Leveraged Bubbles

Moritz Schularick, Alan Taylor and Oscar Jorda

No 910, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: What risks do asset price bubbles pose for the economy? This paper studies bubbles in housing and equity markets in 17 countries over the past 140 years. History shows that not all bubbles are alike. Some have enormous costs for the economy, while others blow over. We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit booms asset price bubbles increase financial crisis risks; upon collapse they tend to be followed by deeper recessions and slower recoveries. Credit-financed house price bubbles have emerged as a particularly dangerous phenomenon.

Date: 2015
New Economics Papers: this item is included in nep-his and nep-ure
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Related works:
Journal Article: Leveraged bubbles (2015)
Working Paper: Leveraged Bubbles (2015)
Working Paper: Leveraged Bubbles (2015)
Working Paper: Leveraged bubbles (2015)
Working Paper: Leveraged Bubbles (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:910

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