Herschel I. Grossman

TL;DR: A number of recent studies address the problem of assessing the contributions of market fundamentals and rational bubbles to stock-price fluctuations, see, for example, Olivier Blanchard and Mark Watson, 1982; Robert Flood, Robert Hodrick, and Paul Kaplan, 1986; and Kenneth West, 1986, 1987 as mentioned in this paper.

TL;DR: In this article, the authors analyze a reputational equilibrium in a model that interprets sovereign debts as contingent claims that both finance investments and facilitate risk shifting, and show that the short-run benefits from repudiation are smaller than the long-run costs from loss of a trustworthy reputation.

TL;DR: In this paper, the authors analyze a reputational equilibrium in a model that interprets sovereign debts as contingent claims that both finance investments and facilitate risk shifting, and show that the short-run benefits from repudiation are smaller than the long-run costs from loss of a trustworthy reputation.

TL;DR: In this paper, it was shown that a positive rational bubble can start only on the first date of trading of a stock and that the existence of a rational bubble at any date would imply that the stock has been overvalued relative to market fund managers since the first day of trading.