Equilibrium Selection in Pure Bubble Models by Dividend Injection

Tomohiro Hirano and Alexis Akira Toda

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Abstract: Rational pure bubble models feature multiple (and often a continuum of) equilibria, which makes model predictions and policy analyses non-robust. We show that when the interest rate in the fundamental equilibrium is below the economic growth rate ($R

Date: 2023-03, Revised 2024-10
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