Asset Bubbles and Macroeconomic Policy

An insightful and in-depth review of asset bubbles—what they are, when and why they arise, and how macroeconomic policy should respond to them.

The existing models of asset bubbles—assets whose price exceeds the present discounted value of the dividends these assets are expected to pay out—have been used to explain various episodes of asset boom-and-busts, ranging from those of the eighteenth century to the present day, including the dot-com and housing booms of the last 25 years.

In Asset Bu...