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ASSET PRICE BUBBLES AND TECHNOLOGICAL INNOVATION.
- Source :
- Economic Inquiry; Jan2019, Vol. 57 Issue 1, p482-497, 16p, 4 Diagrams, 1 Chart, 2 Graphs
- Publication Year :
- 2019
-
Abstract
- We introduce borrowing constraints into a two‐sector Schumpeterian growth model and examine the impact of asset price bubbles on innovation. In this environment, rational bubbles arise when the intermediate good producing R&D sector is faced with adverse productivity shocks. Importantly, these bubbles help alleviate credit constraints and facilitate innovation in the stagnant economy. On the policy front, we make a case for debt financed credit to the R&D sector. Further, we establish that a constant credit growth rule (akin to the Friedman rule) outperforms the often prescribed counter‐cyclical "lean against the wind" credit policy. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00952583
- Volume :
- 57
- Issue :
- 1
- Database :
- Complementary Index
- Journal :
- Economic Inquiry
- Publication Type :
- Academic Journal
- Accession number :
- 133389529
- Full Text :
- https://doi.org/10.1111/ecin.12695