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Stock market bubble, human capital and Growth
1 : Aix-Marseille Sciences Economiques
(AMSE)
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Website
École des Hautes Études en Sciences Sociales : UMR7316, Aix Marseille Université : UMR7316, Ecole Centrale de Marseille : UMR7316, Centre National de la Recherche Scientifique : UMR7316
5-9 Boulevard BourdetCS 5049813205 Marseille Cedex 1 -
France
This paper studies the interaction between the stock market, human capital and growth. We consider an economy with infinite-lived agents, in which firms invest in the general human capital of their workers and face credit constraints. A stock market bubble exists through self-fulfilling optimism. Our main results indicate that bubble episodes are associated with higher growth rates. Stock market bubbles have a credit easing effect, they relax the collateral constraint and improve investment in training. This enhances human capital and thus economic growth.
