Asset Bubbles and Global Imbalances

Abstract

We analyze the relationships between bubbles, capital flows, and economic activities in a rational

Regressive Welfare Effects of Housing Bubbles

“…8 Recent theoretical models have also pointed out that dynamic inefficiency is not always a necessary condition for the existence of rational bubbles if there are financial frictions (e.g., Miao and Wang, 2011;Farhi and Tirole, 2012;Martin and Ventura, 2012) or international capital inflows (e.g., Ikeda and Phan, 2018). …”

“…A common theme in this literature is that rational bubbles emerge to reduce some inefficiency in the financial market, such as an aggregate shortage of assets for storage or a credit market imperfection, as in Miao andWang (2011), Martin andVentura (2012), and Hirano and Yanagawa (2017), Ikeda and Phan (2018). By departing from the pure bubble assumption and modeling a bubble as attached to a fundamentally useful durable asset such as housing, our paper is related to Arce andLópez-Salido (2011), Miao and, Wang and Wen (2012), Hillebrand and Kikuchi (2015), Zhao (2015), Kikuchi and Thepmongkol (2015), and Basco (2016).…”

How expected inflation distorts the current account and the valuation effect

“…2 See Gourinchas and Rey (2014) and for a comprehensive literature review and Kehoe, Ruhl, and Steinberg (2018) and Ikeda and Phan (2019) for recent contributions. converted in domestic currency (100% times the factor of depreciation).…”

Regressive Welfare Effects of Housing Bubbles

“…See, inter alia, Abreu and Brunnermeier (2003), Doblas-Madrid (2012), Doblas-Madrid andLansing (2014), and Barlevy (2014). Wang (2011), Martin and Ventura (2012), and Hirano and Yanagawa (2017), Ikeda and Phan (2018). By departing from the pure bubble assumption and modeling a bubble as attached to a fundamentally useful durable asset such as housing, our paper is related to Arce and López-Salido (2011), Miao and Wang (2012), Wang and Wen (2012), Hillebrand and Kikuchi (2015), Zhao (2015), Kikuchi and Thepmongkol (2015), and Basco (2016).…”