Asset Bubbles, Unemployment, and Financial Market Frictions

Ken-ichi Hashimoto (), Ryonghun Im (), Takuma Kunieda and Akihisa Shibata
Additional contact information
Ken-ichi Hashimoto: Graduate School of Economics, Kobe University
Ryonghun Im: Institute of Economic Research, Kyoto University

No 218, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: A tractable model with infinitely lived agents is constructed for the exam- ination of bubbles and unemployment. It is demonstrated that the presence of bubbles stimulates capital accumulation and reduces unemployment. The presence of bubbles also changes the e ects of government policies that target unemployment and welfare conditions in the labor market. The main findings are as follows: (i) the presence of bubbles is more beneficial to an economy with severe credit constraints; (ii) the presence of bubbles mitigates the negative effects of taxation and unemployment benefits on unemployment and welfare; and (iii) these mitigation effects decrease as credit constraints are relaxed.

Keywords: Asset bubbles; Unemployment; Labor-market matching frictions; Financial frictions. (search for similar items in EconPapers)
JEL-codes: J64 O41 O42 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-07
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://192.218.163.163/RePEc/pdf/kgdp218.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Asset bubbles, unemployment, and financial market frictions (2022)
Working Paper: Asset Bubbles, Unemployment, and Financial Market Frictions (2020)
Working Paper: Asset Bubbles, Unemployment, and Financial Market Frictions (2020)
Working Paper: Asset Bubbles, Unemployment, and Financial Market Frictions (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:218

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