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Intangible Capital, Relative Asset Shortages and Bubbles, Stefano Giglio, Tiago Severo

Abstract
We analyze an overlapping generations economy with financial frictions and accumulation of both physical and intangible capital. The key difference between them is that intangible capital cannot be used as collateral for borrowing. As intangibles become more important in production, financial frictions tighten and equilibrium interest rates decline, creating the conditions for the emergence of rational bubbles. We also analyze the question of dynamic efficiency, demonstrating that, in the presence of financial frictions, neither the interest rate test nor the test proposed by Abel et al. (1989) are appropriate. Finally we show that, in general, rational bubbles are not Pareto improving in our framework
Table Of Contents
Abstract; Contents; I. Introduction; II. Evidence on Intangible Capital and Financing Constraints; A. THE INCREASED IMPORTANCE OF INTANGIBLE CAPITAL; B. INTANGIBLE CAPITAL, COLLATERAL AND FINANCING CONSTRAINTS; III. Model; A. THE OLG STRUCTURE; B. PRODUCTION AND FINANCIAL FRICTIONS; IV. Existence and Characterization of Equilibria; A. THE BUBBLELESS ECONOMY; B. THE BUBBLY ECONOMY; C. STOCHASTIC BUBBLES; V. Intangible Capital, Technological Change, and Bubbles; A. THE IMPORTANCE OF INTANGIBLE CAPITAL AND BUBBLES; B. STOCHASTIC TECHNOLOGICAL PROGRESS AND BUBBLES
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (40 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781283569613

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