Hidden Bibliographic Details
| Other authors / contributors: | Severo, Tiago, author.
International Monetary Fund. Monetary and Capital Markets Department, issuing body.
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| ISBN: | 1283569612
9781283569613
1463937016
9781463937010
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| Notes: | At head of title: MCM.
Title from PDF title page (IMF Web site, viewed November 23, 2011).
"November 2011."
Includes bibliographical references.
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| Summary: | 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.
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| Standard no.: | 10.5089/9781463937010.001
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