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International Transmission of Bubble Crashes: Stationary Sunspot Equilibria in a Two-Country Overlapping Generations Model

Author

Listed:
  • Lise Claini-Chamosset-Yvrard

    (Aix-Marseille University (Aix-Marseille School of Economics) and CNRS-GREQAM & EHESS, France)

  • Takashi Kamihigashi

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

We study the international transmission of bubble crashes by ana- lyzing stationary sunspot equilibria in a two-country overlapping gen- erations exchange economy with stochastic bubbles. We consider two types of stationary sunspot equilibria. The rst type of equilibrium assumes that only the foreign country receives a sunspot shock, while the second type assumes that both countries independently receive sunspot shocks. In the rst type of equilibrium, a bubble crash due to a sunspot shock in the foreign country inevitably causes the home bubble to burst. In the second type of equilibrium, the e ect of a bub- ble crash in the foreign country on the home bubble can be positive or negative. In both types of equilibria, a bubble crash in the foreign country necessarily transmits to the home country.

Suggested Citation

  • Lise Claini-Chamosset-Yvrard & Takashi Kamihigashi, 2015. "International Transmission of Bubble Crashes: Stationary Sunspot Equilibria in a Two-Country Overlapping Generations Model," Discussion Paper Series DP2015-21, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2015-21
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    References listed on IDEAS

    as
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    Cited by:

    1. Takashi Kamihigashi, 2017. "Regime-Switching Sunspot Equilibria in a One-Sector Growth Model with Aggregate Decreasing Returns and Small Externalities," Studies in Economic Theory, in: Kazuo Nishimura & Alain Venditti & Nicholas C. Yannelis (ed.), Sunspots and Non-Linear Dynamics, chapter 0, pages 125-146, Springer.

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    Keywords

    Lobby; Theorisation; Competition policy; Publishing; Japan; Resale price maintenance; Neoliberalism;
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