This review provides a guide to macroeconomic applications of the theory of rational
bubbles. It shows that rational bubbles can be easily incorporated into standard …

Asset price bubbles are situations where asset prices exceed the fundamental values
defined by the present value of dividends. This paper presents a conceptually new …

Introduction to economic theory of bubbles - ScienceDirect Skip to main contentSkip to article
Elsevier logo Journals & Books Search RegisterSign in View PDF Download full issue Search …

This article provides a self-contained overview of the theory of rational asset price bubbles.
We cover topics from basic definitions, properties, and classical results to frontier research …

In this paper, a comprehensive review is carried out on the strand of the literature related to
the effects of bubbles on production, which includes the scarce empirical literature. The …

As long as bubble size is relatively small, bubbles increase production level, but once the
size becomes too large, then bubbles reduce it. Given this non-monotonic relationship, this …

We develop two alternate approaches to arbitrage-free, market-complete, option pricing. The
first approach requires no riskless asset. We develop the general framework for this …

This paper uses a risk-shifting model to analyze policy responses to asset price booms. We
show risk shifting leads to inefficient asset and credit booms in which asset prices can …

An asset bubble relaxes collateral constraints and increases borrowing by credit-
constrained agents. At the same time, as the bubble deflates when constraints start binding …

Government debt can be rolled over forever without primary surpluses in some stochastic
economies, including some economies that are dynamically efficient. In an overlapping …