- More Info
Growth, Bubbles and Entrepreneurs
15:30-17:00, Friday, November 6, 2020
Dr. Xavier RAURICH is now a professor at Department of Economics, Universitat de Barcelona. He Obtained his Ph.D. in Economics at Universitat Autònoma de Barcelona in 1998. His research interests are Macroeconomics, Economic Growth and Development. His articles have been published in Journal of Public Economics, Economic Journal, International Economic Review, among others.
Entrepreneurship, growth, and productivity are larger during periods of rapid asset price growth. We interpret these periods as examples of financial bubbles and show that a model in which individuals live for three periods and are heterogeneous in both wages and the return of productive investment explains these facts. The heterogeneity in the return of investment separates individuals between savers and entrepreneurs. Savers buy financial assets, which are deposits or bubbles. Entrepreneurs incur in a start-up cost and borrow to invest in productive capital in the second period of life. The bubble provides liquidities to credit-constrained entrepreneurs, increasing investment. We show that the number of entrepreneurs is larger with a bubble if the start-up cost is large enough. The increase in the number of entrepreneurs and the liquidity provided by the bubble explain that growth can be larger with bubbles. Finally, productivity may be larger when the liquidity provided by the bubble further increases the investment of more productive entrepreneurs. This occurs when the return of investment is more correlated with wages in the first period of life than with wages in the second period.
For more information of the seminar, scan the following QR code(s) to join Tencent QQ group (904 544 292) or WeChat group named "IAER Seminar (2)", please.
WeChat Group (Valid until 11/9/2020)