Entrepreneurship, growth and productivity with bubbles

Lise Clain-Chamosset-Yvrard, Xavier Raurich and Thomas Seegmuller ()
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Thomas Seegmuller: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: Entrepreneurship, growth and total factor productivity are larger when asset prices are high and decline during financial crises. We explain these facts using a growth model with financial bubbles in which individuals have heterogeneous wages and returns on productive investment. Heterogeneity separates individuals between savers and entrepreneurs. Savers buy financial assets, which are deposits or a financial bubble. Entrepreneurs incur in a start-up cost and borrow to invest in productive capital. The bubble provides liquidities to credit-constrained entrepreneurs. These liquidities increase investment, growth and entrepreneurship. Finally, the bubble may increase productivity when the return of each entrepreneur's investment is positively correlated with her previous income.

Keywords: Bubble; Entrepreneurship; Growth; Productivity (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eff and nep-sbm
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Published in Journal of Macroeconomics, 2024, 81, pp.103622. ⟨10.1016/j.jmacro.2024.103622⟩

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Related works:
Journal Article: Entrepreneurship, growth and productivity with bubbles (2024)
Working Paper: Entrepreneurship, growth and productivity with bubbles (2021)
Working Paper: Entrepreneurship, growth and productivity with bubbles (2021)
Working Paper: Entrepreneurship, growth and productivity with bubbles (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04718292

DOI: 10.1016/j.jmacro.2024.103622

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