Discussion paper

DP11149 Secular Stagnation, Rational Bubbles and Fiscal Policy

It is well known that rational bubbles can be sustained in a dynamically inefficient economy, where the return to capital r is below the growth rate g. However, empirical evidence suggests that modern economies are most of the time on an efficient path with r>g. This paper shows that rational bubbles can be sustained when r

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Citation

Teulings, C (2016), ‘DP11149 Secular Stagnation, Rational Bubbles and Fiscal Policy‘, CEPR Discussion Paper No. 11149. CEPR Press, Paris & London. https://cepr.org/publications/dp11149