The Leverage Cycle

John Geanakoplos
Published Date
Copyright 2010
ISBN 978-0-226-00209-5
DOI 10.1086/648285
Macroannual 2009
Book: NBER Macroeconomics Annual 2009, Volume 24
Book editors: Daron Acemoglu, Kenneth Rogoff & Michael Woodford
PUBLISHER: University of Chicago Press
Series: Macroeconomics Annual

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Equilibrium determines leverage, not just interest rates. Variations in leverage cause fluctuations in asset prices. This leverage cycle can be damaging to the economy.

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