Asset Bubbles in a Monopolistically Competitive Macro Model

Partha Sen

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: I look at the existence of asset bubbles in a monopolistically competitive dynamic macroeconomic model. The positive predictions of te model are very similar to Tirole's competitive model. But the welfare effects are very different - in that as capital gets crowded out, welfare falls. The monopolistically competitive sector contracts and the wage rate falls, lowering welfare.

Keywords: Monopolistic competition; bubble equilibrium; dynamic efficiency (search for similar items in EconPapers)
JEL-codes: D9 E1 O41 (search for similar items in EconPapers)
Date: 1997-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9703

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