Asset bubble and endogenous labor supply: A clarification

Kathia Bahloul Zekkari (1) , Thomas Seegmuller (1)

1 AMSE - Aix-Marseille Sciences Economiques

This paper analyzes the link between asset bubbles, endogenous labor and capital. First, we explicitly and theoretically derive the conditions to have a crowding-in effect of the bubble, i.e. higher levels of capital and labor. Second, the utility function we consider shows that this result does not require an arbitrarily high elasticity of intertemporal substitution in consumption.

Keywords: Asset bubbles; Crowding-in effect; Endogenous labor; Overlapping generations

Domains: Economics and Finance

Kathia Bahloul Zekkari, Thomas Seegmuller. Asset bubble and endogenous labor supply: A clarification. Economics Letters, 2020, 196, pp.109537. ⟨10.1016/j.econlet.2020.109537⟩. ⟨hal-03002581⟩