The Leverage Cycle and Crashes - Financial Theory - John Geanakoplos - Lecture 26 of 26 - Video-lecture

Video-lecture, Financial Theory

Description: In order to understand the precise predictions of the Leverage Cycle theory, in this last class we explicitly solve two mathematical examples of leverage cycles. We show how supply and demand determine leverage as well as the interest rate, and how impatience and volatility play crucial roles in setting the interest rate and the leverage. 
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