Entrepreneurs are exposed to large uninsured risks, which may discourage them from creating productive assets. This generate asset shortages and stimulate speculative demand for bubbles. study introduces entrepreneurial risks into a textbook growth model with infinitely-lived agents. In the model, entrepreneurs face no credit constraints. If degree of is in middle range, bubbles likely emerge. ...

This paper analyzes some new tests of the Cagan hyperinflation–money demand model which have several advantages relative to those in the literature. They do not confound specification error with rational bubbles, can be implemented with a linear procedure, and are frequently able to detect periodically collapsing bubbles which have challenged existing tests. After a Monte Carlo analysis, the te...

Ambiguous beliefs may lead to speculative trade and bubbles. We demonstrate this by showing that the classical Harrison Kreps (1978) example of among agents with heterogeneous can be replicated having common but ambiguous beliefs. More precisely, we show same asset prices pattern obtained in equilibrium agents' recursive multiple-prior expected utilities set priors. While learning about true pr...

Housing markets experience substantial price volatility, short term price change momentum and mean reversion of prices over the long run. Together these features, particularly at their most extreme, produce the classic shape of an asset bubble. In this paper, we review the stylized facts of housing bubbles and discuss theories that can potentially explain events like the boom-bust cycles of the...