AbstractBubbles and money holding can reabsorb capital overaccumulation and restore the MGR in exogenous growth OLG economies. In contrast, under productive externalities and endogenous growth, bubbles and monetary saving can worsen an already inefficient underaccumulation. Under a simple credit market imperfection, we prove that bubbles can fluctuate around a bubbly balanced growth path as sunspot equilibria with shortrun effects on the saving rate.
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Bibliographic InfoPaper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 05-25.
Length: 17 pages
Date of creation: 2005
Date of revision:
overlapping generations model; bubbles; cash-in-advance constraint; sunspot equilibria;
Find related papers by JEL classification:
- D9 - Microeconomics - - Intertemporal Choice and Growth
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- G1 - Financial Economics - - General Financial Markets
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- Bertocchi, Graziella, 1991. "Bubbles and inefficiencies," Economics Letters, Elsevier, vol. 35(2), pages 117-122, February.
- CRETTEZ, Bertrand & MICHEL, Philippe & WIGNIOLLE, Bertrand, 1998.
"Cash-in-advance constraints in the diamond overlapping generations model: neutrality and optimality of monetary policies,"
CORE Discussion Papers
1998005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Crettez, Bertrand & Michel, Philippe & Wigniolle, Bertrand, 1999. "Cash-in-Advance Constraints in the Diamond Overlapping Generations Model: Neutrality and Optimality of Monetary Policies," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 431-52, July.
- Crettez, B. & Michel, P. & Wigniolle, B., 1997. "Cash-in-Advance Constraints in the Diamond Overlapping Generations Model: Neutrality and Optimality of Monetary Policies," Papiers d'Economie MathÃÂ©matique et Applications 97.52, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Parent, Antoine & Rault, Christophe, 2004. "The Influences Affecting French Assets Abroad Prior to 1914," The Journal of Economic History, Cambridge University Press, vol. 64(02), pages 328-362, June.
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