Entrepreneurship, growth and total factor productivity are larger when there is a financial bubble. We explain these facts using a growth model with financial bubbles in which individuals face heterogeneous wages and returns on productive investment. The heterogeneity in the return of investment...

Entrepreneurship, growth and total factor productivity are larger when asset prices are high and decline during financial crises. We explain these facts using a growth model with bubbles in which individuals have heterogeneous wages and returns on productive investment. Heterogeneity separates...