This paper looks at the conditions under which we may have welfare improving capital accumulation in two-sector two-period overlapping generations models. It is found that both the usual conditions of the rate of interest exceeding the population growth rate and profits exceeding investment may...

I look at the existence of asset bubbles in a monopolistically competitive dynamic macroeconomic model. The positive predictions of te model are very similar to Tirole's competitive model. But the welfare effects are very different - in that as capital gets crowded out, welfare falls. The...