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dc.contributor.authorMiao, Jianjunen_US
dc.contributor.authorWang, Pengfeien_US
dc.date.accessioned2019-05-06T14:55:28Z
dc.date.available2019-05-06T14:55:28Z
dc.date.issued2018-09
dc.identifier.citationJianjun Miao, Pengfei Wang. 2018. "Asset Bubbles and Credit Constraints." American Economic Review, Volume 108, Issue 9, pp. 2590 - 2628. https://doi.org/10.1257/aer.20160782
dc.identifier.issn0002-8282
dc.identifier.urihttps://hdl.handle.net/2144/35333
dc.description.abstractWe provide a theory of rational stock price bubbles in production economies with infinitely lived agents. Firms meet stochastic investment opportunities and face endogenous credit constraints. They are not fully committed to repaying debt. Credit constraints are derived from incentive constraints in optimal contracts which ensure default never occurs in equilibrium. Stock price bubbles can emerge through a positive feedback loop mechanism and cannot be ruled out by transversality conditions. These bubbles command a liquidity premium and raise investment by raising the debt limit. Their collapse leads to a recession and a stock market crash.en_US
dc.format.extentp. 2590 - 2628en_US
dc.languageen
dc.language.isoen_US
dc.publisherAmerican Economic Associationen_US
dc.relation.ispartofAmerican Economic Review
dc.rightsCopyright 2019 American Economic Association. All rights reserved.en_US
dc.subjectEconomicsen_US
dc.subjectCommerceen_US
dc.subjectManagementen_US
dc.subjectTourism and servicesen_US
dc.subjectInvestmenten_US
dc.subjectCapacityen_US
dc.subjectFinancingen_US
dc.titleAsset bubbles and credit constraintsen_US
dc.typeArticleen_US
dc.description.versionPublished versionen_US
dc.identifier.doi10.1257/aer.20160782
pubs.elements-sourcecrossrefen_US
pubs.notesEmbargo: Not knownen_US
pubs.organisational-groupBoston Universityen_US
pubs.organisational-groupBoston University, College of Arts & Sciencesen_US
pubs.organisational-groupBoston University, College of Arts & Sciences, Department of Economicsen_US
pubs.publication-statusPublisheden_US


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