Intangible Capital, Relative Asset Shortages and Bubbles /

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 fricti...

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Autor principal: Giglio, Stefano
Altres autors: Severo, Tiago
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 2011.
Col·lecció:IMF Working Papers; Working Paper ; No. 2011/271
Accés en línia:Full text available on IMF
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245 1 0 |a Intangible Capital, Relative Asset Shortages and Bubbles /  |c Stefano Giglio, Tiago Severo. 
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490 1 |a IMF Working Papers 
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520 3 |a 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 and others (1989) are appropriate. Finally we show that, in general, rational bubbles are not Pareto improving in our framework. 
538 |a Mode of access: Internet 
700 1 |a Severo, Tiago. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2011/271 
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