"Asset Bubbles, Endogenous Growth, and Financial Frictions"

This paper analyzes the effects of bubbles in an in.nitely-lived agent model of endogenous growth with .nancial frictions and heterogeneous agents. We provide a complete characterization on the relationship between .nancial frictions and the existence of bubbles. Our model predicts that if the degree of pledgeability is sufficiently high or sufficiently low, bubbles can not exist. They can only arise at an intermediate degree. This suggests that improving the financial market condition might enhance the possibility of bubbles. We also examine whether bubbles are growth-enhancing or growth-impairing in the long run. We show that when the degree of pledgeability is relatively low, bubbles boost long-run growth. On the other hand, when it is relatively high, bubbles lower long-run growth. Moreover, we examine the effects of the burst of bubbles, and show that the effects much depend on the degree of the pldgeability, i.e., the quality of financial system.

Asset Bubbles, Endogenous Growth, and Financial Frictions

This paper analyzes the effects of bubbles in an infinitely-lived agent model of endogenous growth with financial frictions and heterogeneous agents. We provide a complete characterization on the relationship between financial frictions and the existence of bubbles. Our model predicts that if the degree of pledgeability is sufficiently high or sufficiently low, bubbles can not exist. They can only arise at an intermediate degree. This suggests that improving the financial market condition might enhance the possibility of bubbles. We also examine whether bubbles are growth-enhancing or growth-impairing in the long run. We show that when the degree of pledgeability is relatively low, bubbles boost long-run growth. On the other hand, when it is relatively high, bubbles lower long-run growth. Moreover, we examine the effects of the burst of bubbles, and show that the effects much depend on the degree of the pldgeability, i.e., the quality of financial system.Asset Bubbles, Endogenous Growth, Financial Frictions

"Financial Institution, Asset Bubbles and Economic Performance"

This paper explores the relation between the quality of financial institution and asset bubbles. In this paper, we will show that bubbles can improve the macro performance even if the quality of financial institution is very poor and the financial market does not work well. In this sense, the high quality of financial institution and bubbles are substitutes. We will explore, however, that they are not perfect substitutes. Bubbles may burst. If bubbles burst, the economic performance must go down if the quality of financial institution is low. Hence, we will show that not relaying on bubbles, but improving the quality of financial institution is important for long run macro performance.

Asset Price Bubbles in the Kiyotaki-Moore Model

We examine the effect of asset price bubbles in the Kiyotaki-Moore model. We show that the dynamic interactions between bubble-asset price, land price, and output generate powerful bubbly dynamics. The boom-bust cycles in bubble-asset price cause boom-crash cycles in the land market simultaneously, like a contagion by affecting the fundamentals of land. We also numerically analyze the welfare effects of bubbles in transitional dynamics.Bubbly Dynamics, Contagion, Welfare Effects of Bubbles

A Theory of Rational Housing Bubbles with Phase Transitions

We analyze equilibrium housing prices in an overlapping generations model with perfect housing and rental markets. We prove that the economy exhibits a two-stage phase transition: as the income of home buyers rises, the equilibrium regime changes from fundamental only to coexistence of fundamental and bubbly equilibria. With even higher incomes, fundamental equilibria disappear and housing bubbles become inevitable. Even with low current incomes, housing bubbles may emerge if home buyers have access to credit or have high future income expectations. Contrary to widely-held beliefs, fundamental equilibria in the coexistence region are inefficient despite housing being a productive non-reproducible asset

Bubble economics

This article provides a self-contained overview of the theory of rational asset price bubbles. We cover topics from basic definitions, properties, and classical results to frontier research, with an emphasis on bubbles attached to real assets such as stocks, housing, and land. The main message is that bubbles attached to real assets are fundamentally nonstationary phenomena related to unbalanced growth. We present a bare-bones model and draw three new insights: (i) the emergence of asset price bubbles is a necessity, instead of a possibility; (ii) asset pricing implications are markedly different between balanced growth of stationary nature and unbalanced growth of nonstationary nature; and (iii) asset price bubbles occur within larger historical trends involving shifts in industrial structure driven by technological innovation, including the transition from the Malthusian economy to the modern economy

Unique Equilibria in Models of Rational Asset Price Bubbles

Existing models of rational pure bubble models feature multiple (and often a continuum of) equilibria, which makes model predictions and policy analysis non-robust. We show that when the interest rate in the fundamental equilibrium is below the economic growth rate ($R<G$), a bubbly equilibrium with $R=G$ exists. By injecting dividends that are vanishingly small relative to aggregate income to the bubble asset, we can eliminate the fundamental steady state and resolve equilibrium indeterminacy. We show the general applicability of dividend injection through examples in overlapping generations and infinite-horizon models with or without production or financial frictions

Bubble Economics

This article provides a self-contained overview of the theory of rational asset price bubbles. We cover topics from basic definitions, properties, and classical results to frontier research, with an emphasis on bubbles attached to real assets such as stocks, housing, and land. The main message is that bubbles attached to real assets are fundamentally nonstationary phenomena related to unbalanced growth. We present a bare-bones model and draw three new insights: (i) the emergence of asset price bubbles is a necessity, instead of a possibility; (ii) asset pricing implications are markedly different between balanced growth of stationary nature and unbalanced growth of nonstationary nature; and (iii) asset price bubbles occur within larger historical trends involving shifts in industrial structure driven by technological innovation, including the transition from the Malthusian economy to the modern economy

Effects of chemical composition and stereoregularity on phase-transition behaviors of aqueous solutions of copolymers composed of N-isopropylacrylamide and N-n-propylacrylamide

Radical copolymerizations of N-isopropylacrylamide (NIPAAm) and N-n-propylacrylamide (NNPAAm) in various ratios were carried out in toluene at –40 °C in the presence of 3-methyl-3-pentanol to prepare syndiotactic copolymers with racemo dyad contents of ca. 70%. It was revealed that copolymers containing more than 92.5 mol% NNPAAm units exhibited large phase-transition hysteresis of their aqueous solutions. Sequence analysis suggested that intramolecular hydrogen-bonding of contiguous NNPAAm units in syndiotactic stereosequences in the dehydrated state were responsible for induction of the large hysteresis