{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,28]],"date-time":"2025-10-28T03:18:52Z","timestamp":1761621532775},"reference-count":4,"publisher":"The Econometric Society","issue":"4","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["ECTA"],"abstract":"<jats:p>In Giglio, Maggiori, and Stroebel (2016), we propose and implement a new test for classic rational bubbles. Such bubbles derive their value from each agent's rational expectation of being able to resell the bubble claims to the next agent. Backward induction ensures that classic rational bubbles can only exist on infinite\u2010maturity assets. Our empirical exercise shows that infinite\u2010maturity claims and 999\u2010year claims for otherwise identical housing assets trade at the same price, and thus rules out the presence of classic rational bubbles. Domeij and Ellingsen (DE) informally propose an alternative equilibrium of a bubble that they claim is consistent with our empirical findings. DE's bubble relies on information frictions such that market participants are unaware of the bubble. Our paper clearly excluded this type of bubble from the scope of our test, and DE's note thus has no implications for the validity of our test. Instead, DE's bubble simply represents one of many possible examples of bubbles on which our test was explicitly silent.<\/jats:p>","DOI":"10.3982\/ecta18174","type":"journal-article","created":{"date-parts":[[2020,7,21]],"date-time":"2020-07-21T12:43:25Z","timestamp":1595335405000},"page":"1767-1770","source":"Crossref","is-referenced-by-count":1,"title":["Reply to \u201cRational Bubbles in UK Housing Markets\u201d"],"prefix":"10.3982","volume":"88","author":[{"given":"Stefano","family":"Giglio","sequence":"first","affiliation":[{"name":"School of Management, Yale University"},{"name":"NBER"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Matteo","family":"Maggiori","sequence":"additional","affiliation":[{"name":"Graduate School of Business, Stanford University"},{"name":"NBER"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Johannes","family":"Stroebel","sequence":"additional","affiliation":[{"name":"Stern School of Business, New York University"},{"name":"NBER"}],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"2359","published-online":{"date-parts":[[2020]]},"reference":[{"key":"ecta200170-bib-0001","volume-title":"Crises in the Economic and Financial Structure","author":"Blanchard","year":"1982"},{"issue":"3","key":"ecta200170-bib-0002","doi-asserted-by":"crossref","first-page":"1047","DOI":"10.3982\/ECTA13447","volume":"84","author":"Giglio","year":"2016","journal-title":"Econometrica"},{"key":"ecta200170-bib-0003","doi-asserted-by":"crossref","first-page":"1163","DOI":"10.2307\/1911868","volume":"50","author":"Tirole","year":"1982","journal-title":"Econometrica"},{"key":"ecta200170-bib-0004","doi-asserted-by":"crossref","first-page":"1499","DOI":"10.2307\/1913232","volume":"53","author":"Tirole","year":"1985","journal-title":"Econometrica"}],"container-title":["Econometrica"],"original-title":[],"language":"en","deposited":{"date-parts":[[2020,7,21]],"date-time":"2020-07-21T13:05:08Z","timestamp":1595336708000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.econometricsociety.org\/doi\/10.3982\/ECTA18174"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2020]]},"references-count":4,"journal-issue":{"issue":"4","published-online":{"date-parts":[[2020]]}},"alternative-id":["10.3982\/ECTA18174"],"URL":"https:\/\/doi.org\/10.3982\/ecta18174","relation":{},"ISSN":["0012-9682"],"issn-type":[{"value":"0012-9682","type":"print"}],"subject":[],"published":{"date-parts":[[2020]]}}}