Asset bubbles, labour market frictions and R&D‐based growth
In: The Canadian journal of economics: the journal of the Canadian Economics Association = Revue canadienne d'économique, Band 52, Heft 2, S. 822-846
ISSN: 1540-5982
AbstractEmploying an overlapping generations model of R&D‐based growth with labour market frictions, this paper examines how employment changes induced by labour market frictions influence asset bubbles and long‐run economic growth. Asset bubbles can (cannot) exist when the employment rate is high (low), which leads to higher (lower) economic growth through labour market efficiency. We also explore the steady state and transitional dynamics of bubbles, economic growth and employment. Furthermore, we show that policy or parameter changes with a negative influence on the labour market can lead to a bubble burst.