Authors: Alberto Martin and Jaume Ventura
Annual Review of Economics, Vol. 10, 505-539, August, 2018This review provides a guide to macroeconomic applications of the theory of rational bubbles. It shows that rational bubbles can be easily incorporated into standard macroeconomic models and illustrates how they can be used to account for important macroeconomic phenomena. It also discusses the welfare implications of rational bubbles and the role of policy in managing them. Finally, it provides a detailed review of the literature.
This paper originally appeared as
Barcelona School of Economics Working Paper 989