01796cas a2200253 a 4500 AALejournalIMF011407 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463925260 1018-5941 BD-DhAAL BD-DhAAL Giglio, Stefano. Intangible Capital, Relative Asset Shortages and Bubbles / Stefano Giglio, Tiago Severo. Washington, D.C. : International Monetary Fund, 2011. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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. Mode of access: Internet Severo, Tiago. IMF Working Papers; Working Paper ; No. 2011/271 Full text available on IMF http://elibrary.imf.org/view/journals/001/2011/271/001.2011.issue-271-en.xml IMF e-Library