Information manipulation and rational investment booms and busts

Highlights • Friedman rule assumes a source of finance: lump-sum taxation. • Lump-sum taxes are like a debt obligation. • If people are permitted to

Highlights • We link the boom that preceded the "Great Recession" and the eventual bust together. • Expected gains from financial innovations may hav

Highlights • Endogenous investment booms and busts arise in a rational expectations framework. • Aggregate distortions exist despite the design of op

Highlights • An economy where defaulters lose collateral and exclusion occurs probabilistically. • A higher exclusion probability implies better enfo

Highlights • The regional availability of bond and bank financing induces debt inflexibility. • Inflexibility limits the firm's ability to replace ba

Highlights • We study economic growth through eliminating rather than augmenting non-reproducible factors. • We obtain the balanced growth path and c

Highlights • This paper shows that investor sentiment helps account for the forward premium puzzle. • The same mechanism helps account for other styl

Highlights • Macro model with banks. • Bank runs and endogenous bank capital. • Risk taking channel. • Endogenous risk formation. • Optimal an

Highlights • Government investment in public capital forecasts high risk premiums. • Result is in contrast with negative link between private invest

Highlights • We propose two system-based identification-robust methods for DSGE models. • Valid under weak identification and auxiliary assumptions