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Asset bubbles, labor market frictions, and R&D-based growth

Listed author(s):
  • Ken-ichi Hashimoto

    ()

    (Graduate School of Economics, Kobe University)

  • Ryonghun Im

    ()

    (Japan Society for the Promotion of Science, Research Fellowship for Young Scientists, Graduate School of Economics, Kobe University)

Employing an overlapping generations model of research and development (R&D)-based growth with labor market frictions, this paper examines how employment changes induced by labor market frictions influence asset bubbles and long-run economic growth. Asset bubbles can (cannot) exist when the employment rate is high (low), which leads to higher (lower) economic growth through labor market efficiency. We also explore the steady state and transitional dynamics of bubbles, economic growth, and employment. Furthermore, we show that policy or parameter changes that have a negative influence on the labor market can lead to a bubble burst.

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File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2016/1642.pdf
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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 1642.

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Length: 34 pages
Date of creation: Nov 2016
Handle: RePEc:koe:wpaper:1642
Contact details of provider: Web page: http://www.econ.kobe-u.ac.jp
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  1. repec:wop:calsdi:97-23 is not listed on IDEAS
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