Unique Equilibria in Models of Rational Asset Price Bubbles

Tomohiro Hirano and Alexis Akira Toda

No 23-005E, CIGS Working Paper Series from The Canon Institute for Global Studies

Abstract: Existing models of rational pure bubble models feature multiple (and often a continuum of) equilibria, which makes model predictions and policy analysis non-robust. We show that when the interest rate in the fundamental equilibrium is below the economic growth rate (R

Keywords: bubble; dividend; equilibrium indeterminacy; growth; low interest rate. JEL codes: D53; G12. (search for similar items in EconPapers)
Pages: 42
Date: 2023-03
New Economics Papers: this item is included in nep-fdg and nep-mac
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