EconPapers    
Economics at your fingertips  
 

Bubbles, growth and imperfection of credit market in a two-country model

Ryosuke Shimizu ()
Additional contact information
Ryosuke Shimizu: Kyoto University

Annals of Finance, 2018, vol. 14, issue 3, 353-377

Abstract: Abstract This study extends Hirano and Yanagawa (Rev Econ Stud 84(1):406–443, 2017) to an asymmetric two-country model and examines bubbles effects on each country’s long-run economic growth rate. This study also provides numerical examples with respect to the relationship between each country’s growth rate and their financial frictions in the balanced growth equilibria with bubbles and without bubbles. It shows that foreign bubbles have positive and negative effects on both countries’ growth rates, and which effect dominates depends on the level of financial development in both countries. In this study, the positive effect of bubbles tends to dominate when the total level of financial frictions in both countries is relatively low. When the total effect of bubbles on the growth rate is positive, the burst of foreign bubbles leads to a decrease in the growth rate in both countries. This implies that there is a positive correlation between foreign bubbles and the domestic as well as the foreign country’s growth rate.

Keywords: Bubbles; Asymmetric two-country model; Financial frictions; Economic growth (search for similar items in EconPapers)
JEL-codes: E44 F41 F43 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10436-018-0320-9 Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:annfin:v:14:y:2018:i:3:d:10.1007_s10436-018-0320-9

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/10436/PS2

Access Statistics for this article

Annals of Finance is currently edited by Anne Villamil

More articles in Annals of Finance from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-11-06
Handle: RePEc:kap:annfin:v:14:y:2018:i:3:d:10.1007_s10436-018-0320-9