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Several recent papers introduce different mechanisms to explain why asset bubbles are observed in periods of larger growth. Common assumptions in these papers are the existence of heterogeneous traders and the introduction of borrowing constraints, but they differ in the role of the bubble, that can be used as collateral in a borrowing constraint or to provide liquidities. In this paper, we introduce heterogeneous traders by considering an overlapping generations model with households living three periods. Young households cannot invest in capital, while adults have access to investment and face a borrowing constraint. Introducing bubbles in a quite general way, encompassing the different roles they can have in the existing literature, we show that the bubble may only enhance growth when the borrowing constraint is binding. More significantly, our results do not depend on the role attributed to the bubble.
