Asset bubble and endogenous labor supply: a clarification

Kathia Bahloul Zekkari and Thomas Seegmuller

Working Papers from HAL

Abstract: This paper analyzes the link between asset bubbles, endogenous labor and capital. The question is whether endogenous labor, per se, can explain a crowding-in effect of the bubble, i.e. higher levels of capital and labor. With respect to the existing literature, our contribution is twofold. First, we explicitly and theoretically derive the conditions to have a crowding-in effect of the bubble. Second, the utility function we consider allows us to show that this result does not require an arbitrarily high elasticity of intertemporal substitution in consumption. Our result still holds for a unit value of this elascticity (Cobb-Douglas utility).

Keywords: Asset bubbles; crowding-in effect; endogenous labor; overlapping generations (search for similar items in EconPapers)
Date: 2020-07-02
New Economics Papers: this item is included in nep-dge and nep-upt
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Related works:
Journal Article: Asset bubble and endogenous labor supply: A clarification (2020)
Working Paper: Asset bubble and endogenous labor supply: a clarification (2020)
Working Paper: Asset bubble and endogenous labor supply: A clarification (2020)
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