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Discussion Papers In Economics And Business. 2014, 14-11, p. 1-21

Growth effct of bubbles in a non-scale endogenous growth model with in-house R&D

Takao, Kizuku

Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

英語

text

2014-02

http://www2.econ.osaka-u.ac.jp/library/global/dp/1411.pdf

This paper provides a theoretical explanation for why the presence of asset bub- bles can lead to higher economic growth in concurrence with high consumption by using a simple endogenous growth model. In the model economy, long-lived value- maximizing firms continuously improve the quality of their specific products through in-house R&D, while at the same time new firms also enter into the market. Due to an absence of intergenerational altruism, asset bubbles can exist as pyramid schemes whose value is not backed by fundamental value. The presence of asset bubbles then leads to higher interest rates. This requires product proliferation to be impeded, which would result in an increase in the demand for differentiated goods at the level of an individual firm. A larger scale of production at the level of an individual firm can encourage in-house R&D of firms and promote economic growth.

Growth effct of bubbles in a non-scale endogenous growth model with in-house R&D

Takao, Kizuku

Graduate School of Economics and Osaka School of International Public Policy (OSIPP), Osaka University

英語

2014-02

Discussion Papers In Economics And Business

14-11

1

21

https://hdl.handle.net/11094/26931

http://www2.econ.osaka-u.ac.jp/library/global/dp/1411.pdf