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Leverage and Asset Prices: An Experiment
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| Other Authors: | Fostel, Ana [Other] • Houser, Daniel [Other] |
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| Type of Resource: | E-Book |
| Language: | English |
| published: |
Cambridge, Mass
National Bureau of Economic Research
2020
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| Series: |
NBER working paper series |
| Source: | Verbunddaten SWB Lizenzfreie Online-Ressourcen |
| Summary: | We develop a model of leverage that is amenable to laboratory implementation and gather experimental data. We compare two identical economies: in one economy, agents cannot borrow; in the other, they can leverage a risky asset to issue debt. Leverage increases asset prices in the laboratory. This increase is significant and quantitatively close to what theory predicts. Moreover, also as theory suggests, leverage allows gains from trade to be realized in the laboratory. Finally, the mechanism generating the price increase in the lab is due to the asset role as collateral, and different from what we would observe with a simple credit line or bigger cash endowments |
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| Physical Description: | 1 Online-Ressource; illustrations (black and white) |
| Type of Resource: |
System requirements: Adobe [Acrobat] Reader required for PDF files. Mode of access: World Wide Web. |
| DOI: | 10.3386/w26701 |
| Access: | Open Access |