Living with a Monetary System infected by Bubbles
I study the real effects of bubbles in a price-settingenvironment. Bubbles cause price dispersion and overinvestment in assets that are overvalued. And when they pop some goods are not sold and capacity is not fully utilized. I argue that a government monopoly on the creation of bubble assets is desirable but may be difficult to achieve. A non-linear tax on capital gains and a 'high' interest rate policy can play a role in protecting the governmentï¿½s monopoly on the creation of bubble assets.
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- Boyan Jovanovic, 2008.
"Bubbles in Prices of Exhaustible Resources,"
2008 Meeting Papers
26, Society for Economic Dynamics.
- Boyan Jovanovic, 2007. "Bubbles in Prices of Exhaustible Resources," Levine's Working Paper Archive 122247000000001414, David K. Levine.
- Boyan Jovanovic, 2007. "Bubbles in Prices of Exhaustible Resources," NBER Working Papers 13320, National Bureau of Economic Research, Inc.
- Jovanovic, Boyan, 2008. "Bubbles In Prices Of Exhaustible Resources," Working Papers 45830, American Association of Wine Economists.
- Eden, Benjamin, 1990. "Marginal Cost Pricing When Spot Markets Are Complete," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1293-1306, December.
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