Leveraged asset price bubbles, i.e., boom-bust phases in asset prices accompanied by credit overhangs, are more harmful than unleveraged ones, in terms of nancial and macroeconomic stability. If bubbles are not all alike, neither are all bubbles likely? As bubbles are dicult to detect in real-time data, early researches focused on the macroeconomic conditions exacerbating the bubbles' nature. We specically look at a condition that could become more persistent in the aftermath of Covid-19 pandemic: low risk-free interest rates. In an OLG model, we show that the existence condition for a leveraged bubble is more easily met than that of an unleveraged bubble with low interest rates, and thus leveraged bubbly episodes are relatively more likely to emerge than unleveraged ones. Then, we show that this result holds empirically for post-World War II bubbles in advanced economies.

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All the variables involved in the estimation are summarized in Table A1. Total net revenues are the difference between total revenues -the sum of indirect and taxes and social contributions-and current transfers to households and firms. Indirect taxes are set on goods, production and import paid by firms and households. The main items for goods refer to VAT, oil, gas and electricity. At the same time, Italian regions set the IRAP and part of the tax on house holdings (IMU) on the production side. Direct taxes refer to the tax on personal income (IRPEF), the tax on company income (IRES), the tax on entrepreneurial income (IRI) and the IMU. Social contributions are paid by employers (up to two-thirds) and in part by employees (up to one-third), plus the contributions paid by employees to social services. The current regional expenses are the expenses for final consumption, excluding social transfers. They are the expenses for intermediate goods and services purchases and employees of the public administration for public services. Public investments are the purchases of new minus end-of-life capital goods, net acquisitions of non-financial activities that are still not produced, contributions to investments and capital transfers to firms and households from public administration. All the variables are sourced by ISTAT apart from national-level variables that the OECD sources.

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