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The Macroeconomics of Rational Bubbles: A User's Guide

Alberto Martin, Jaume Ventura

NBER Working Paper No. 24234
Issued in January 2018, Revised in January 2018
NBER Program(s):Economic Fluctuations and Growth Program, International Finance and Macroeconomics Program, Monetary Economics Program

This paper provides a guide to macroeconomic applications of the theory of rational bubbles. It shows that rational bubbles can be easily incorporated into standard macroeconomic models, and illustrates how they can be used to account for important macroeconomic phenomena. It also discusses the welfare implications of rational bubbles and the role of policy in managing them. Finally, it provides a detailed review of the literature.

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Document Object Identifier (DOI): 10.3386/w24234

Published: Alberto Martin & Jaume Ventura, 2018. "The Macroeconomics of Rational Bubbles: A User's Guide," Annual Review of Economics, vol 10(1). citation courtesy of

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