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How large is the social cost of an asset bubble?

Author

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  • Jumpei Tanaka

    (The University of Kitakyusyu)

Abstract

Using the Grossman and Yanagawa(1993) model, we investigate how large the social cost of an asset bubble is. We show that if the utilities of all generations are evaluated almost equally, the extent of its social cost is equivalent to imposing on all generations a wage income tax whose rate is the ratio of the quantity of bubble asset to the total savings in the balanced growth equilibrium.

Suggested Citation

  • Jumpei Tanaka, 2007. "How large is the social cost of an asset bubble?," Economics Bulletin, AccessEcon, vol. 5(24), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-07e00002
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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General

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