Working Paper（24-001E）Money is the roof of asset bubbles

This paper examines how monetary expansion causes asset bubbles. Whenthere is no monetary expansion, a bubbly asset is not created due to a hold-upproblem. Monetary expansion increases buyers’ money holdings, and then, dealersare willing to buy a worthless asset from sellers, in hopes of selling it to buyers
who may not know that it is worthless—a bubble now occurs.

Keywords: Bubbles, dealers, higher-order uncertainty, money

JEL Classification Numbers: D82, D83, D84, E44, E52, G12, G14