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Financial Market Globalization and Asset Price Bubbles

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dc.contributor.authorYago, N.
dc.date.accessioned2022-01-04T17:05:17Z
dc.date.available2022-01-04T17:05:17Z
dc.date.issued2021-09-23
dc.description.abstractWe construct a two-country model of rational bubbles with asymmetric degrees of financial development. We show that whether financial globalization gives rise to bubbles crucially depends on the levels of financial development in the two countries. In economies with either developed or underdeveloped financial market relative to the foreign one, bubbles cannot arise under financial autarky but they can arise under financial globalization. Moreover, unlike previous literature, bubbles in sufficiently well-developed financial markets lead to welfare losses in other countries.
dc.identifier.doi10.17863/CAM.79380
dc.identifier.otherCWPE2167
dc.identifier.urihttps://www.repository.cam.ac.uk/handle/1810/331931
dc.language.isoeng
dc.publisherFaculty of Economics, University of Cambridge
dc.relation.ispartofseriesCambridge Working Papers in Economics
dc.rightsAll Rights Reserved
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/
dc.subjectFinancial globalization
dc.subjectAsset bubbles
dc.subjectCredit friction
dc.titleFinancial Market Globalization and Asset Price Bubbles
dc.typeWorking Paper
rioxxterms.versionAO

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