globally. The result has been a succession of bubbles and crashes, including the worldwide stock market bubble and great crash … stock market bubbles, the emerging markets bubbles and crashes in 1994 and 1997, the Long-Term Capital Management (LTCM …) crisis of 1998, the dotcom bubble bursting in 2000, the recent house price bubbles, the financialization bubble via special …

We analyze the ups and downs in economic growth in recent decades by constructing a model with recurrent bubbles …, crashes, and endogenous growth. Once realized, bubbles crowd in investment and stimulate economic growth, but expectation … about future bubbles crowds out investment and reduces economic growth. We identify bubbly episodes by estimating the model …