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Asset bubbles, labor market frictions, and R&D-based growth

Ken-ichi Hashimoto and Ryonghun Im ()
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Ryonghun Im: Japan Society for the Promotion of Science, Research Fellowship for Young Scientists, Graduate School of Economics, Kobe University

No 1642, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: Employing an overlapping generations model of research and development (R&D)-based growth with labor market frictions, this paper examines how employment changes induced by labor market frictions influence asset bubbles and long-run economic growth. Asset bubbles can (cannot) exist when the employment rate is high (low), which leads to higher (lower) economic growth through labor market efficiency. We also explore the steady state and transitional dynamics of bubbles, economic growth, and employment. Furthermore, we show that policy or parameter changes that have a negative influence on the labor market can lead to a bubble burst.

Keywords: overlapping generations; asset bubbles; labor market friction; employment rate; R&D (search for similar items in EconPapers)
JEL-codes: J64 O41 O42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-gro, nep-ino and nep-lab
Date: 2016-11
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