TY  - JOUR
AU  - Farhi,Emmanuel
AU  - Tirole,Jean
TI  - Bubbly Liquidity
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16750
PY  - 2011
Y2  - January 2011
UR  - http://www.nber.org/papers/w16750
L1  - http://www.nber.org/papers/w16750.pdf
N1  - Author contact info:
Emmanuel Farhi
Harvard University
Department of Economics
Littauer Center
Cambridge, MA 02138
Tel: 617/496-1835
Fax: 617/495-8570
E-Mail: efarhi@harvard.edu

Jean Tirole
Institut d'Economie Industrielle
Bureau MF529 - Bat. F
21 allees de Brienne
31000 Toulouse
FRANCE
Tel: 33-561-128642
E-Mail: jean.tirole@tse-fr.eu
AB  - This paper analyzes the possibility and the consequences of rational bubbles in a dy- namic economy where financially constrained firms demand and supply liquidity. Bub- bles are more likely to emerge, the scarcer the supply of outside liquidity and the more limited the pledgeability of corporate income; they crowd investment in (out) when liquidity is abundant (scarce). We analyze extensions with firm heterogeneity and sto- chastic bubbles.
ER  -