Guerron-Quintana, Pablo A., Hirano, Tomohiro and Jinnai, Ryo
(2023)
Bubbles, crashes, and economic growth: theory and evidence.
American Economic Journal: Macroeconomics, 15 (2).
333 - 371.
ISSN 1945-7707
Full text not available from this repository.
Abstract
We analyze the ups and downs in economic growth in recent decades by constructing a model with recurrent bubbles, crashes, and endogenous growth. Once realized, bubbles crowd in investment and stimulate economic growth, but expectation about future bubbles crowds out investment and reduces economic growth. We identify bubbly episodes by estimating the model using the US data. Counterfactual simulations suggest that the IT and housing bubbles not only caused economic booms but also lifted US GDP by almost 2 percentage points permanently, but the economy could have grown even faster if people had believed that asset bubbles would never arise. (JEL E22, E23, E32, E44, G14, R31)
| Item Type: |
Article
|
| Divisions: |
Centre for Macroeconomics |
| Subjects: |
H Social Sciences > HC Economic History and Conditions |
| JEL classification: |
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment (including Inventories); Capacity
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E23 - Production
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets |
| Date Deposited: |
20 Jan 2025 16:36 |
| Last Modified: |
20 Jan 2025 19:03 |
| URI: |
http://eprints.lse.ac.uk/id/eprint/126940 |
Actions (login required)
 |
View Item |
