Jump to ContentJump to Main Navigation
New Perspectives on Asset Price Bubbles$
Users without a subscription are not able to see the full content.

Douglas D. Evanoff, George G. Kaufman, and A. G. Malliaris

Print publication date: 2012

Print ISBN-13: 9780199844333

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780199844333.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 27 October 2021

Rethinking Theoretical Models of Bubbles

Rethinking Theoretical Models of Bubbles

Reflections Inspired by the Financial Crisis and Allen and Gorton’s Paper “Churning Bubbles”1

Chapter:
(p.41) Chapter 3 Rethinking Theoretical Models of Bubbles
Source:
New Perspectives on Asset Price Bubbles
Author(s):

Gadi Barlevy

Publisher:
Oxford University Press
DOI:10.1093/acprof:osobl/9780199844333.003.0003

This chapter comments on the paper, “Churning Bubbles,” by Franklin Allen and Gary Gorton. In their paper, Allen and Gorton examine whether stock prices are determined by fundamentals or whether “bubbles” can exist. The chapter examines the state of theoretical models of asset price bubbles and considers the lessons learned from the financial crisis of 2007–2009. It also looks at the gap between the theoretical work on asset bubbles and the apparent change in views coming out of the financial crisis about the appropriate policy response. It suggests that theoretical models of bubbles have failed to adequately address welfare considerations and thus are unable to offer convincing analytical guidance to central banks as to whether an economy is better off with or without a bubble.

Keywords:   asset price bubbles, Franklin Allen, Gary Gorton, stock prices, theoretical models, financial crisis, welfare, central banks, economy

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .