International Transmission of Bubble Crashes: Stationary Sunspot Equilibria in a Two-Country Overlapping Generations Model

Lise Claini-Chamosset-Yvrard and Takashi Kamihigashi
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Lise Claini-Chamosset-Yvrard: Aix-Marseille University (Aix-Marseille School of Economics) and CNRS-GREQAM & EHESS, France
Authors registered in the RePEc Author Service: Lise Clain-Chamosset-Yvrard

No DP2015-21, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: We study the international transmission of bubble crashes by ana- lyzing stationary sunspot equilibria in a two-country overlapping gen- erations exchange economy with stochastic bubbles. We consider two types of stationary sunspot equilibria. The rst type of equilibrium assumes that only the foreign country receives a sunspot shock, while the second type assumes that both countries independently receive sunspot shocks. In the rst type of equilibrium, a bubble crash due to a sunspot shock in the foreign country inevitably causes the home bubble to burst. In the second type of equilibrium, the e ect of a bub- ble crash in the foreign country on the home bubble can be positive or negative. In both types of equilibria, a bubble crash in the foreign country necessarily transmits to the home country.

Keywords: Lobby; Theorisation; Competition policy; Publishing; Japan; Resale price maintenance; Neoliberalism (search for similar items in EconPapers)
Pages: 25 pages
Date: 2015-06
New Economics Papers: this item is included in nep-dge and nep-opm
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Citations: View citations in EconPapers (2)

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