Bursting Bubbles in a Macroeconomic Model

Tomohiro Hirano, Keiichi Kishi and Alexis Akira Toda

No 25-001E, CIGS Working Paper Series from The Canon Institute for Global Studies

Abstract: This paper identifies the conditions and mechanisms that give rise to stochastic bubbles that are expected to collapse. To illustrate the essence of the emergence of stochastic bubbles, we first present a toy model that shows that land price bubbles that are expected to collapse emerge as the unique equilibrium outcome. Then we present a full-fledged macro-finance model of intangible capital and show that stochastic stock bubbles attached to intangible capital emerge in the process of spillover of technological innovation. The dynamics with stochastic bubbles, which is characterized by unbalanced growth, can be seen as a temporary deviation from a balanced growth path in which asset prices equal the fundamentals.

Pages: 40
Date: 2025-01
New Economics Papers: this item is included in nep-dge and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cigs.canon/en/uploads/2025/01/WP25-001E_hirano.pdf (application/pdf)

Related works:
Working Paper: Bursting Bubbles in a Macroeconomic Model (2025)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnn:wpaper:25-001e

Access Statistics for this paper

More papers in CIGS Working Paper Series from The Canon Institute for Global Studies Contact information at EDIRC.
Bibliographic data for series maintained by The Canon Institute for Global Studies ().