Chicago Fed paper aims to explain asset fluctuations through ‘unified' model
Asset prices, interest rates, leverage and physical investment in assets all rise steadily during the up phases of the asset price cycle, and fall steadily and continually during the unwinding, a Federal Reserve Bank of Chicago working paper finds.
Bubbles and Leverage: A Simple and Unified Approach, by Robert Barsky and Theodore Bogusz, constructs a "simple" framework that draws on two theories of the role of credit in major asset price fluctuations: the Miller-Geanakoplos-Simsek and the Allen
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