A Quantitative Model of Bubble-Driven Business Cycles

Benjamin Larin
Additional contact information
Benjamin Larin: Leipzig University

No 662, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: The 2007-2008 financial crisis highlighted that a turmoil in the financial sector including bursting asset price bubbles can cause pronounced and persistent fluctuations in real economic activity. This motivates the consideration of evolving and bursting asset price bubbles as another source of fluctuations in a business cycle model. In this paper rational asset price bubbles are therefore incorporated into a life-cycle RBC model as first developed by Rı́os-Rull (1996). The calibration of the model to the post-war US economy and the numerical solution show that the model is able to generate plausible bubble-driven business cycles – economic fluctuations caused by evolving and bursting asset price bubbles.

Date: 2018
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_662.pdf (application/pdf)

Related works:
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:red:sed018:662

Access Statistics for this paper

More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().