Recession. In this paper I demonstrate the role of bubbles in secular stagnation. Bubbles increase the natural rate of interest …, hence they alleviate the cause of secular stagnation. This suggests a positive role for bubbles, however bubbles are … intrinsically unstable. Larger bubbles are shown to be more unstable, and upon collapse the natural rate of interest falls …

This paper develops a general equilibrium model to examine the quantitative effects of speculative bubbles on capital … late 1990s. The welfare cost of speculative bubbles depends crucially on parameter values. Bubbles can improve welfare if …, the welfare cost of bubbles is large, typically exceeding one percent of annual consumption …

This paper studies the consequences of asset bubbles for economies that are vulnerable to persistent stagnation …, forcing output to fall instead. In such context, bubbles are useful as they expand the supply of assets, absorb excess savings … raising welfare. While safe bubbles are more likely to expand economic activity, riskier bubbles command a risk premium that …