Note on Bubbles Attached to Real Assets
A rational bubble is a situation in which the asset price exceeds its fundamental value defined by the present value of dividends in a rational equilibrium model. We discuss the recent development of the theory of rational bubbles attached to real assets, emphasizing the following three points. (i) There exist plausible economic models in which bubbles inevitably emerge in the sense that all equilibria are bubbly. (ii) Such models are necessarily nonstationary but their long-run behavior can be analyzed using the local stable manifold theorem. (iii) Bubbles attached to real assets can naturally and necessarily arise with economic development. Finally, we present a model with stocks and land, and show that bubbles in aggregate stock and land prices necessarily emerge.
Code (0)
등록된 구현이 없습니다.
Similar Papers 제목 키워드 기반
Bubble Economics
This article provides a self-contained overview of the theory of rational asset price bubbles. We cover topics from basic definitions, properties, and classical results to frontier research, with an emphasis on bubbles a…
Bursting Bubbles in a Macroeconomic Model
This paper identifies the conditions and mechanisms that give rise to stochastic bubbles that are expected to collapse. To illustrate the essence of the emergence of stochastic bubbles, we first present a toy model, and …
modelRational Bubbles: A Clarification
"Rational bubble", as introduced by the famous paper on money by Samuelson (1958), means speculation backed by nothing. The large subsequent rational bubble literature has identified attaching bubbles to dividend-paying …
Cryptocurrency Bubble Detection: A New Stock Market Dataset, Financial Task & Hyperbolic Models
The rapid spread of information over social media influences quantitative trading and investments. The growing popularity of speculative trading of highly volatile assets such as cryptocurrencies and meme stocks presents…
Asset Prices with Overlapping Generations and Capital Accumulation: Tirole (1985) Revisited
We revisit the classic paper of Tirole "Asset Bubbles and Overlapping Generations" (1985, Econometrica), which shows that the emergence of asset bubbles solves the capital over-accumulation problem. While Tirole's main i…