Intangible capital, relative asset shortages and bubbles

Stefano Giglio and Tiago Severo

Journal of Monetary Economics, 2012, vol. 59, issue 3, 303-317

Abstract: Purely technological factors can be a fundamental force behind the emergence of asset price bubbles in developed economies. We analyze an economy in which the production technology utilizes both physical and intangible capital, where the latter cannot be used as collateral for borrowing. Technological change, in the form of increased importance of intangible capital in production, sharpens the borrowing constraints of entrepreneurs, leading to a scarcity of high-yield assets relative to low-yield ones. This can create the conditions for asset bubbles. Additionally, due to the financial frictions, standard dynamic efficiency tests are not valid, and bubbles are not Pareto improving.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393212000384
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Intangible Capital, Relative Asset Shortages and Bubbles (2011)
Working Paper: Intangible Capital, Relative Asset Shortages and Bubbles (2011)
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:moneco:v:59:y:2012:i:3:p:303-317

DOI: 10.1016/j.jmoneco.2012.03.004

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().