Leverage and asset bubbles
Subtitle: averting Armageddon with Chapter 11?
By: Marcus Miller, Joseph E. Stiglitz
Contributors: Stiglitz, Joseph E.; National Bureau of Economic Research
Series: NBER working paper series -- working paper 15817; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15817.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to "overshoot" equilibrium when an asset bubble bursts-threatening widespread insolvency and what Richard Koo calls a "balance sheet recession".  Besides interest rates cuts, asset purchases and capital restructuring are key to crisis resolution.  The usual bankruptcy procedures for doing this fail to internalise the price effects of asset "fire-sales" to pay down debts, however.  We discuss how official intervention in the form of "super" Chapter 11 actions can help prevent asset price correction causing widespread economic disruption"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 4/6/2010.

Includes bibliographical references.

Also available in print.

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Mode of access: World Wide Web.