EconPapers    
Economics at your fingertips  
 

A note on the crowd-in effect of asset bubbles in the perpetual youth model

Takuma Kunieda

Mathematical Social Sciences, 2014, vol. 72, issue C, 50-54

Abstract: A perpetual youth overlapping generations model is presented in which the presence of financial frictions can create the crowd-in effect of asset bubbles that promotes capital accumulation. The existence of asset bubbles increases the equilibrium interest rate. Although the increased interest rate excludes less productive agents from production activity, these agents benefit from the liquidity of an intrinsically useless asset, rolling over the asset to the next period. As a result, allocative inefficiency is corrected, and capital accumulation can be promoted.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165489614000766
Full text for ScienceDirect subscribers only

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:eee:matsoc:v:72:y:2014:i:c:p:50-54

DOI: 10.1016/j.mathsocsci.2014.10.003

Access Statistics for this article

Mathematical Social Sciences is currently edited by J.-F. Laslier

More articles in Mathematical Social Sciences from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-19
Handle: RePEc:eee:matsoc:v:72:y:2014:i:c:p:50-54