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Equilibrium Selection in Pure Bubble Models by Dividend Injection

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  • Tomohiro Hirano
  • Alexis Akira Toda

Abstract

Rational pure bubble models feature multiple (and often a continuum of) equilibria, which makes model predictions and policy analyses non-robust. We show that when the interest rate in the fundamental equilibrium is below the economic growth rate ($R

Suggested Citation

  • Tomohiro Hirano & Alexis Akira Toda, 2023. "Equilibrium Selection in Pure Bubble Models by Dividend Injection," Papers 2303.05636, arXiv.org, revised Oct 2024.
    • Handle: RePEc:arx:papers:2303.05636
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    References listed on IDEAS

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