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Asset Bubbles in an Overlapping Generations Model with Endogenous Labor Supply

  • Lisi Shi

    (University of Connecticut)

  • Richard M. H. Suen

    (University of Connecticut)

This paper examines the e¤ects of asset bubbles in an overlapping generations model with endogenous labor supply. We show analytically that asset bubbles can lead to an expansion in steady-state capital, investment, employment and output under certain conditions. The analytical results are followed by a speci c numerical example.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2014-02.

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Length: 11 pages
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:uct:uconnp:2014-02
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  1. Nourry, Carine, 2001. "Stability of equilibria in the overlapping generations model with endogenous labor supply," Journal of Economic Dynamics and Control, Elsevier, vol. 25(10), pages 1647-1663, October.
  2. Farhi, Emmanuel & Tirole, Jean, 2009. "Bubbly Liquidity," IDEI Working Papers 577, Institut d'Économie Industrielle (IDEI), Toulouse, revised Feb 2011.
  3. Gomme, Paul & Rupert, Peter, 2007. "Theory, measurement and calibration of macroeconomic models," Journal of Monetary Economics, Elsevier, vol. 54(2), pages 460-497, March.
  4. Gourinchas, Pierre-Olivier & Parker, Jonathan A, 2000. "Consumption Over the Life-Cycle," CEPR Discussion Papers 2345, C.E.P.R. Discussion Papers.
  5. Costas Azariadis & Shankha Chakraborty, 1998. "Asset price volatility in a nonconvex general equilibrium model," Economic Theory, Springer, vol. 12(3), pages 649-665.
  6. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
  7. Alberto Martin & Jaume Ventura, 2010. "Economic Growth with Bubbles," NBER Working Papers 15870, National Bureau of Economic Research, Inc.
  8. Olivier, Jacques, 2000. "Growth-Enhancing Bubbles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 133-51, February.
  9. Gary Hansen, 2010. "Indivisible Labor and the Business Cycle," Levine's Working Paper Archive 233, David K. Levine.
  10. Jianjun Miao & PENGFEI WANG, 2011. "Bubbles and Total Factor Productivity," Boston University - Department of Economics - Working Papers Series WP2011-030, Boston University - Department of Economics.
  11. repec:tpr:qjecon:v:102:y:1987:i:1:p:1-22 is not listed on IDEAS
  12. Tirole, Jean, 1985. "Asset Bubbles and Overlapping Generations," Econometrica, Econometric Society, vol. 53(6), pages 1499-1528, November.
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