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Economic Growth With Bubbles

Jaume Ventura

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

November 2003

UPF Economics and Business Working Paper 848

This paper presents a stylized model of economic growth with bubbles. This model views asset price bubbles as a market-generated device to moderate the effects of frictions in financial markets, improving the allocation of investments and raising the capital stock and welfare. The model illustrates various channels through which asset price bubbles affect the incentives for innovation and economic reforms, and therefore, the rate of economic growth. The model also offers a new perspective on the effects of financial development on asset price bubbles and economic growth.

Number of Pages in PDF File: 30

Keywords: Asset price bubbles, economic growth, financial frictions, innovations and reforms

JEL Classification: E32, O40, G10

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Date posted: November 30, 2005  

Suggested Citation

Ventura, Jaume, Economic Growth With Bubbles (November 2003). Available at SSRN: http://ssrn.com/abstract=860884 or http://dx.doi.org/10.2139/ssrn.860884

Contact Information

Jaume Ventura (Contact Author)
Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )
Ramon Trias Fargas, 25-27
Barcelona, 08005
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  10
Citations:  33

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