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Identifier to cite or link to this item: https://hdl.handle.net/10086/27746

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Title
Asset Bubbles and Bailouts
Creator
Creator Name
Hirano, Tomohiro Hirano, Tomohiro
Affiliation
Affiliation Name
University of Tokyo
Creator Name
Inaba, Masaru Inaba, Masaru
Affiliation
Affiliation Name
Kansai University
Affiliation
Affiliation Name
The Canon Institute for Global Studies
Creator Name
Yanagawa, Noriyuki Yanagawa, Noriyuki
Affiliation
Affiliation Name
University of Tokyo
Key Word
Bubble Size
Anticipated Bailouts
Production Efficiency
Boom-Bust Cycles
Optimal Bailout Policy
JEL
E32
E44
E61
Abstract
This paper investigates the relationship between bubbles and governmentbailouts. As long as bubble size is relatively small, bubbles increase production level, but once the size becomes too large, then bubbles reduce it. Given this non-monotonic relationship, we show that bailouts for bursting bubbles may positively influence ex-ante production efficiency and relax the existence condition of stochastic bubbles. The level of bailouts has a non-monotonic relationship with production efficiency and a "partial bailout" policy achieves production efficiency. Moreover, it examines the welfare effects of bailout policies rigorously and shows that even non-risky bubbles may be undesirable for taxpayers.
Description
First Version: April 2011, This Version: March 2015
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2015-05
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
HIT-REFINED Working Paper Series ; No. 19
Relation
Related Identifier
URI
  http://www.ier.hit-u.ac.jp/hit-refined/
Number of Pages
43
Sponsorship
基盤研究(S) = Grants-in-Aid for Scientific Research (S)
Appears in Collections
Working Paper Series / Real Estate Markets, Financial Crisis, and Economic Growth An Integrated Economic Approach
URL
https://hdl.handle.net/10086/27746