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Bubbles and Total Factor Productivity

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  • Jianjun Miao
  • Pengfei Wang

Abstract

This paper presents an infinite-horizon model of production economies in which firms face idiosyncratic productivity shocks and are subject to endogenous credit constraints. Credit-driven stock price bubbles can arise which can relax credit constraints and reallocate capital more efficiently among firms. The collapse of bubbles causes a fall of total factor productivity.

Suggested Citation

  • Jianjun Miao & Pengfei Wang, 2012. "Bubbles and Total Factor Productivity," American Economic Review, American Economic Association, vol. 102(3), pages 82-87, May.
    • Handle: RePEc:aea:aecrev:v:102:y:2012:i:3:p:82-87
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    References listed on IDEAS

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    7. Jianjun Miao & PENGFEI WANG, 2011. "Sectoral Bubbles and Endogenous Growth," Boston University - Department of Economics - Working Papers Series WP2011-032, Boston University - Department of Economics.
    8. Sangeeta Pratap & Carlos Urrutia, 2012. "Financial Frictions and Total Factor Productivity: Accounting for the Real Effects of Financial Crises," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(3), pages 336-358, July.
    9. Albert Queralto, 2011. "Financial Market Frictions, Productivity Growth and Crises in Emerging Economies," 2011 Meeting Papers 697, Society for Economic Dynamics.
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