Asset Price Bubbles in the Kiyotaki-Moore Model

We examine the effect of asset price bubbles in the Kiyotaki-Moore model. We show that the dynamic interactions between bubble-asset price, land price, and output generate powerful bubbly dynamics. The boom-bust cycles in bubble-asset price cause boom-crash cycles in the land market simultaneously, like a contagion by affecting the fundamentals of land. We also numerically analyze the welfare effects of bubbles in transitional dynamics.

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Year of publication:	2010-12
Authors:	Hirano, Tomohiro ; Inaba, Masaru

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Type of publication:	Book / Working Paper
Language:	English
Notes:	Hirano, Tomohiro and Inaba, Masaru (2010): Asset Price Bubbles in the Kiyotaki-Moore Model.
Classification:	E44 - Financial Markets and the Macroeconomy
Source:	BASE

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