Bubbly Recessions (AEJ:M 2019) Code

Principal Investigator(s):  View help for Principal Investigator(s) Andrew Hanson, University of North Carolina-Chapel Hill; Toan Phan, Federal Reserve Bank of Richmond; Siddhartha Biswas, University of North Carolina-Chapel Hill

Version:  View help for Version V1

Name File Type Size Last Modified
BHP19_calibration.m text/x-matlab 6.8 KB 09/15/2019 08:38:AM
BHP19_data.xlsx application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 21.5 KB 09/15/2019 08:38:AM
BHP19_go.m text/x-matlab 95.7 KB 09/15/2019 08:38:AM
BHP19_master.m text/x-matlab 2.5 KB 09/15/2019 08:38:AM
README.txt text/plain 5.2 KB 09/15/2019 08:38:AM
bubble_eq.m text/x-matlab 1.5 KB 09/15/2019 08:38:AM
bubbleless_eq.m text/x-matlab 1.4 KB 09/15/2019 08:38:AM
bubbleless_eq_ZLB.m text/x-matlab 4.1 KB 09/15/2019 08:38:AM
run_model_BHP19.m text/x-matlab 11.4 KB 09/15/2019 08:38:AM

Project Citation: 

Hanson, Andrew, Phan, Toan, and Biswas, Siddhartha. Bubbly Recessions (AEJ:M 2019) Code. Nashville, TN: American Economic Association [publisher], 2020. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2020-09-28. https://doi.org/10.3886/E110902V1

Project Description

Summary:  View help for Summary
We develop a tractable bubbles model with financial friction and downward wage rigidity. Competitive speculation in risky bubbles can result in excessive investment booms that precede inefficient busts, where post-bubble aggregate economic activities collapse below the pre-bubble trend. Risky bubbles can reduce ex-ante social welfare, and leaning-against-the-bubble policies that balance the boom-bust trade-off can be warranted. We further show that the collapse of a bubble can push the economy into a "secular stagnation" equilibrium, where the zero lower bound and the nominal wage rigidity constraint bind, leading to a persistent recession, such as the Japanese "lost decades."

Scope of Project

Subject Terms:  View help for Subject Terms rational bubbles; recessions; liquidity traps
JEL Classification:  View help for JEL Classification
      E10 General
      E21 Consumption • Saving • Wealth
      E22 Investment • Capital • Intangible Capital • Capacity
      E22
Geographic Coverage:  View help for Geographic Coverage Japan
Time Period(s):  View help for Time Period(s) 1970 – 2015
Collection Date(s):  View help for Collection Date(s) 3/19/2017 – 7/25/2019
Data Type(s):  View help for Data Type(s) aggregate data

Methodology

Data Source:  View help for Data Source World Bank, Constant GDP per capita for Japan [NYGDPPCAPKDJPN], retrieved from FRED, Federal Reserve Bank of St. Louis; 
https://fred.stlouisfed.org/series/NYGDPPCAPKDJPN

International Monetary Fund, International Financial Statistics and data files using World Bank data on the GDP deflator. https://data.worldbank.org/indicator/FR.INR.RINR?locations=JP

Piketty, Thomas, and Zucman, Gabriel. 2014. "CAPITAL IS BACK: WEALTH-INCOME RATIOS IN RICH
COUNTRIES 1700–2010: Dataset". Quarterly Journal of Economics. http://gabriel-zucman.eu/files/capitalisback/Japan.xls
Geographic Unit:  View help for Geographic Unit Japan

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V1 [2020-09-28]

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