On the interplay between speculative bubbles and productive investment

The aim of this paper is to study the interplay between long term productive investments and more short term and liquid speculative ones. A three-period lived overlapping generations model allows us to make this distinction. Agents have a portfolio decision. When young, they can invest in human capi...

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Detalhes bibliográficos
Autores: Raurich, Xavier, Seegmuller, Thomas
Formato: artículo
Estado:Versión aceptada para publicación
Fecha de publicación:2019
País:España
Recursos:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
Repositorio:Recercat. Dipósit de la Recerca de Catalunya
OAI Identifier:oai:recercat.cat:2445/134475
Acesso em linha:https://hdl.handle.net/2445/134475
Access Level:acceso abierto
Palavra-chave:Societats d'inversió
Serveis financers
Especulació
Mutual funds
Financial services industry
Speculation
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repository_id_str
spelling On the interplay between speculative bubbles and productive investmentRaurich, XavierSeegmuller, ThomasSocietats d'inversióServeis financersEspeculacióMutual fundsFinancial services industrySpeculationThe aim of this paper is to study the interplay between long term productive investments and more short term and liquid speculative ones. A three-period lived overlapping generations model allows us to make this distinction. Agents have a portfolio decision. When young, they can invest in human capital that is a productive long term investment that provides a return during the following two periods. When young or in the middle age, they can invest in a bubble. Young individuals can also borrow on a credit market to finance the productive investment. However, the amount borrowed is limited by a credit constraint. We show that the existence of a stationary bubble raises productive investment and production when the bubleless economy is credit constrained and dynamically efficient. Indeed, young agents sell short the bubble to increase productive investments, whereas traders at middle age transfer wealth to old age. The bubble allows to relax the credit constraint. We outline that a permanent technological shock inducing either a larger return of capital in the short term or a similar increase in the return of capital in both periods raises productive capital, production and the bubble size. We use our framework to discuss the effect on the occurrence of bubbles of financial regulation and fiscal policy.Elsevier B.V.2019202320192019info:eu-repo/semantics/articleinfo:eu-repo/semantics/acceptedVersion21 p.application/pdfhttps://hdl.handle.net/2445/134475Articles publicats en revistes (Economia)reponame:Recercat. Dipósit de la Recerca de Catalunyainstname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)InglésVersió postprint del document publicat a: https://doi.org/10.1016/j.euroecorev.2018.11.002European Economic Review, 2019, vol. 111, num. January, p. 400-420https://doi.org/10.1016/j.euroecorev.2018.11.002cc-by-nc-nd (c) Elsevier B.V., 2019http://creativecommons.org/licenses/by-nc-nd/3.0/esinfo:eu-repo/semantics/openAccessoai:recercat.cat:2445/1344752026-05-29T05:05:01Z
dc.title.none.fl_str_mv On the interplay between speculative bubbles and productive investment
title On the interplay between speculative bubbles and productive investment
spellingShingle On the interplay between speculative bubbles and productive investment
Raurich, Xavier
Societats d'inversió
Serveis financers
Especulació
Mutual funds
Financial services industry
Speculation
title_short On the interplay between speculative bubbles and productive investment
title_full On the interplay between speculative bubbles and productive investment
title_fullStr On the interplay between speculative bubbles and productive investment
title_full_unstemmed On the interplay between speculative bubbles and productive investment
title_sort On the interplay between speculative bubbles and productive investment
dc.creator.none.fl_str_mv Raurich, Xavier
Seegmuller, Thomas
author Raurich, Xavier
author_facet Raurich, Xavier
Seegmuller, Thomas
author_role author
author2 Seegmuller, Thomas
author2_role author
dc.subject.none.fl_str_mv Societats d'inversió
Serveis financers
Especulació
Mutual funds
Financial services industry
Speculation
topic Societats d'inversió
Serveis financers
Especulació
Mutual funds
Financial services industry
Speculation
description The aim of this paper is to study the interplay between long term productive investments and more short term and liquid speculative ones. A three-period lived overlapping generations model allows us to make this distinction. Agents have a portfolio decision. When young, they can invest in human capital that is a productive long term investment that provides a return during the following two periods. When young or in the middle age, they can invest in a bubble. Young individuals can also borrow on a credit market to finance the productive investment. However, the amount borrowed is limited by a credit constraint. We show that the existence of a stationary bubble raises productive investment and production when the bubleless economy is credit constrained and dynamically efficient. Indeed, young agents sell short the bubble to increase productive investments, whereas traders at middle age transfer wealth to old age. The bubble allows to relax the credit constraint. We outline that a permanent technological shock inducing either a larger return of capital in the short term or a similar increase in the return of capital in both periods raises productive capital, production and the bubble size. We use our framework to discuss the effect on the occurrence of bubbles of financial regulation and fiscal policy.
publishDate 2019
dc.date.none.fl_str_mv 2019
2019
2019
2023
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/acceptedVersion
format article
status_str acceptedVersion
dc.identifier.none.fl_str_mv https://hdl.handle.net/2445/134475
url https://hdl.handle.net/2445/134475
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv Versió postprint del document publicat a: https://doi.org/10.1016/j.euroecorev.2018.11.002
European Economic Review, 2019, vol. 111, num. January, p. 400-420
https://doi.org/10.1016/j.euroecorev.2018.11.002
dc.rights.none.fl_str_mv cc-by-nc-nd (c) Elsevier B.V., 2019
http://creativecommons.org/licenses/by-nc-nd/3.0/es
info:eu-repo/semantics/openAccess
rights_invalid_str_mv cc-by-nc-nd (c) Elsevier B.V., 2019
http://creativecommons.org/licenses/by-nc-nd/3.0/es
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv 21 p.
application/pdf
dc.publisher.none.fl_str_mv Elsevier B.V.
publisher.none.fl_str_mv Elsevier B.V.
dc.source.none.fl_str_mv Articles publicats en revistes (Economia)
reponame:Recercat. Dipósit de la Recerca de Catalunya
instname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
instname_str Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
reponame_str Recercat. Dipósit de la Recerca de Catalunya
collection Recercat. Dipósit de la Recerca de Catalunya
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15,81155

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