Sunspot Bubbles

Stefano Bosi ()
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Stefano Bosi: EPEE, Université d’Evry

No 05-25, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: Bubbles and money holding can reabsorb capital overaccumulation and restore the MGR in exogenous growth OLG economies. In contrast, under productive externalities and endogenous growth, bubbles and monetary saving can worsen an already inefficient underaccumulation. Under a simple credit market imperfection, we prove that bubbles can fluctuate around a bubbly balanced growth path as sunspot equilibria with shortrun effects on the saving rate.

Keywords: overlapping generations model; bubbles; cash-in-advance constraint; sunspot equilibria (search for similar items in EconPapers)
JEL-codes: D9 E4 G1 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2005
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