Growth-Enhancing Bubbles

Volume: 41, Issue: 1, Pages: 133 - 152
Published: Feb 1, 2000
Abstract
This article challenges the conventional wisdom that speculation in financial markets reduces long-run growth. It shows that the real impact of a (rational deterministic) speculative bubble depends on the type of asset that is being speculated on. Speculative bubbles on equity raise the market value of firms, thus encouraging entrepreneurship, firm creation, investment, and growth. On the other hand, speculation on other types of assets is shown...
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Paper Details
Title
Growth-Enhancing Bubbles
Published Date
Feb 1, 2000
Volume
41
Issue
1
Pages
133 - 152
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