Economics at your fingertips  

Asset Bubbles and Foreign Interest Rate Shocks

Pengfei Wang (), Jing Zhou and Jianjun Miao ()
Additional contact information
Jing Zhou: Fudan University

No 221, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: We provide an infinite-horizon general equilibrium model of a small open economy with both domestic and international financial market frictions. Firms face credit constraints and use a bubble asset (land) as collateral to borrow. A land bubble can provide liquidity and relax credit constraints. Low foreign interest rates are conducive to bubble formation. A rise in foreign interest rate can cause the collapse of the asset bubble, which in turn causes an equilibrium regime shift and a sudden stop. Asset bubbles provide an important amplification mechanism.

Date: 2017
New Economics Papers: this item is included in nep-dge and nep-mon
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Asset Bubbles and Foreign Interest Rate Shocks (2022) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

Page updated 2022-08-13
Handle: RePEc:red:sed017:221