HAL will be down for maintenance from Friday, June 10 at 4pm through Monday, June 13 at 9am. More information
Skip to Main content Skip to Navigation
Journal articles

Confidence and the Real Value of Money in an Overlapping Generation Economy

Abstract : We demonstrate that stochastic bubbles which have a constant, exogenous, probability of collapsing may exist, in general equilibrium, on an intrinsically useless and unbacked asset (money). This may happen provided that the probability q that the bubble will persist next period is large enough and exceeds a threshold level Q which we call the minimum rate of confidence. This condition is always violated when the economy without bubble is dynamically efficient. It is more likely to be satisfied, in dynamically inefficient economies, the larger the “size” of the inefficiency (as measured by the excess of the growth rate over the no-bubble interest rate). We study both exchange and production economies.
Document type :
Journal articles
Complete list of metadata

Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Thursday, October 21, 2021 - 9:50:26 PM
Last modification on : Tuesday, January 25, 2022 - 3:18:03 PM


  • HAL Id : hal-03393234, version 1
  • SCIENCESPO : 2441/8710



Philippe Weil. Confidence and the Real Value of Money in an Overlapping Generation Economy. Quarterly Journal of Economics, Oxford University Press (OUP), 1987, 102 (1), pp.1 - 22. ⟨hal-03393234⟩



Record views