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Economics

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2009

Regulation

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The Leverage Cycle, John Geanakoplos Jul 2009

The Leverage Cycle, John Geanakoplos

Cowles Foundation Discussion Papers

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


The Leverage Cycle, John Geanakoplos Jul 2009

The Leverage Cycle, John Geanakoplos

Cowles Foundation Discussion Papers

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