The Macroeconomics of Rational Bubbles: A User's Guide

Posted: 7 Sep 2018

See all articles by Alberto Martin

Alberto Martin

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

Jaume Ventura

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI)

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Date Written: August 2018

Abstract

This review provides a guide to macroeconomic applications of the theory of rational bubbles. It shows that rational bubbles can be easily incorporated into standard macroeconomic models and illustrates how they can be used to account for important macroeconomic phenomena. It also discusses the welfare implications of rational bubbles and the role of policy in managing them. Finally, it provides a detailed review of the literature.

Suggested Citation

Martin, Alberto and Ventura, Jaume, The Macroeconomics of Rational Bubbles: A User's Guide (August 2018). Annual Review of Economics, Vol. 10, pp. 505-539, 2018. Available at SSRN: https://ssrn.com/abstract=3245111 or http://dx.doi.org/10.1146/annurev-economics-080217-053534

Alberto Martin (Contact Author)

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Jaume Ventura

Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

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