I review the literature on financial speculation driven by belief disagreements from a macroeconomics perspective. To highlight unifying themes, develop stylized macroeconomic model that embeds several mechanisms. With short-selling constraints, can generate overvaluation and speculative bubbles. Leverage substantially inflate bubbles, leverage limits depend perceived downside risks. Shifts in ...

Abstract Credit supply expansion boosts housing speculation and amplifies the cycle. The surge in private-label mortgage securitization 2003 fueled a large credit by lenders financed with noncore deposits. Areas more exposed to these experienced relative rise transaction volume driven small group of speculators, areas simultaneously witnessed an amplified boom bust. Consistent importance belief...

In response to questions about the relative importance of different types capital flow for international competitiveness, we develop a structural vector auto-regressive model real exchange rate and flows. We reveal that innovations speculative sentiment cause changes in competitiveness. report speculation replaces effect equity, bond most interest effect. The results show is an important contri...