Bubbles, Crises, and Policy

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In many recent cases financial-liberalization has led to a bubble in asset prices. The bursting of the bubble results in a banking crisis and recession. It is suggested such bubbles are caused by an interaction of the risk-shifting problem arising from agency relationships in intermediaries and uncertainty concerning the expansion of credit.

Link to material: http://finance.wharton.upenn.edu/~allenf/download/Vita/bubbles.pdf