Rational equity bubbles

Ge Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: This paper discusses the existence of a bubble in the pricing of an asset that pays positive dividends. I show that rational bubbles can exist in a growing economy. The existence of bubbles depends on the relative magnitudes of risk aversion to consumption and to wealth. Furthermore, I examine how an exogenous shock in technology might trigger bubbles.

Keywords: bubbles; the spirit of capitalism; growth (search for similar items in EconPapers)
JEL-codes: E20 E44 (search for similar items in EconPapers)
Date: 2012-06-11
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:39398

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