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Asset Bubbles In A Monopolistic Competitive Macro Model

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  • Partha Sen

    (Delhi School of Economics)

Abstract

I look at the existence of asset. bubbles in a monopolistically competitive dynamic macroeconomic model. The positive predictions of the model are very similar to Tirole’s competitive model. But the welfare effects are very different-in that as capital gets crowded out welfare falls. The monopolistically competitive sector contracts and the wage rate falls, lowering welfare. Earlier versions of this paper were presented at seminars at the Delhi School of Economics, Cambridge, Strathclyde and ISI Calcutta.

Suggested Citation

  • Partha Sen, 1996. "Asset Bubbles In A Monopolistic Competitive Macro Model," Working papers 39, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:39
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    References listed on IDEAS

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    1. Pagano, Marco, 1990. "Imperfect Competition, Underemployment Equilibria and Fiscal Policy," Economic Journal, Royal Economic Society, vol. 100(401), pages 440-463, June.
    2. Matsuyama, Kiminori, 1991. "Immiserizing Growth in Diamond's Overlapping Generations Model: A Geometrical Exposition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(1), pages 251-262, February.
    3. Philippe Weil, 1987. "Confidence and the Real Value of Money in an Overlapping Generations Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(1), pages 1-22.
    4. Grossman, Gene M. & Yanagawa, Noriyuki, 1993. "Asset bubbles and endogenous growth," Journal of Monetary Economics, Elsevier, vol. 31(1), pages 3-19, February.
    5. Nobuhiro Kiyotaki, 1988. "Multiple Expectational Equilibria Under Monopolistic Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 695-713.
    6. Galor, Oded, 1992. "A Two-Sector Overlapping-Generations Model: A Global Characterization of the Dynamical System," Econometrica, Econometric Society, vol. 60(6), pages 1351-1386, November.
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