Bubbles and Total Factor Productivity
Boston University - Department of Economics
Hong Kong University of Science & Technology (HKUST)
April 8, 2012
American Economic Review, Forthcoming
This paper provides a model in which firms face idiosyncratic productivity shocks and endogenous credit constraints. We show that stock price bubbles can exist and allow capital to be reallocated to more productive firms. The collapse of bubbles tightens credit constraints and reduce total factor productivity.
Number of Pages in PDF File: 6Accepted Paper Series
Date posted: April 9, 2012
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