Paper #848

Título:

Economic growth with bubbles

Autores:

Alberto Martin y Jaume Ventura

Data:

Noviembre 2003

Resumen:

We develop a stylized model of economic growth with bubbles. In this model, changes in investor sentiment lead to the appearance and collapse of macroeconomic bubbles or pyramid schemes. We show how these bubbles mitigate the effects of financial frictions. During bubbly episodes, unproductive investors demand bubbles while productive investors supply them. These transfers of resources improve the efficiency at which the economy operates, expanding consumption, the capital stock and output. When bubbly episodes end, these transfers stop and consumption, the capital stock and output contract. We characterize the stochastic equilibria of the model and argue that they provide a natural way of introducing bubble shocks into business cycle models.

Palabras clave:

bubbles, dynamic inefficiency, economic growth, financial frictions, pyramid schemes

Códigos JEL:

E32, E44, O40

Área de investigación:

Macroeconomía y Economía Internacional

Publicado en:

American Economic Review, 102 (6), 3033-3058, October 2012

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