Funding Externalities, Asset Prices and Investors' "Search for Yield"

Gai, Prasanna; Trivedi, Kamakshya

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Funding Externalities, Asset Prices and Investors' "Search for Yield"

Date

2009

Authors

Gai, Prasanna

Trivedi, Kamakshya

Publisher

Blackwell Publishing Ltd

Abstract

This note presents a simple model that nests the 'excess liquidity' and 'savings glut' hypotheses of the debate on the recent asset price boom. It clarifies the notion of investors' 'search for yield' and shows how financial frictions influence asset price dynamics.