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The Leverage Cycle

55 Pages Posted: 5 Aug 2009  

John Geanakoplos

Yale University - Cowles Foundation

Multiple version iconThere are 2 versions of this paper

Date Written: July 31, 2009

Abstract

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.

Keywords: Leverage, Collateral, Cycle, Crisis, Regulation

JEL Classification: E3, E32, G01, G12

Suggested Citation

Geanakoplos, John, The Leverage Cycle (July 31, 2009). Cowles Foundation Discussion Paper No. 1715. Available at SSRN: https://ssrn.com/abstract=1441943 or http://dx.doi.org/10.2139/ssrn.1441943

John D Geanakoplos (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States
203-432-3397 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://cowles.econ.yale.edu/P/au/d_gean.htm

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