Financial Bubbles,Financialization and Economic Growth——The Perspective of Dynamic Multi-sector Asset Bubbles
We introduce multi-sector bubbles into the general equilibrium model with endogenous growth,and use this framework to discuss deleveraging policies and industrial policies for stabilizing the financial system and promoting economic growth.We show that the financialization of real sector increases the systemic risk of the macro economy,and reduces the positive spillover of the real sector on economic growth.The government should control the size of the bubble to reduce risks in the financial system,while actively use industrial policies to increase subsidies to the manufacturing sector to achieve lasting im-provements in the quantity and quality of economic growth.
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