Abstract
By replacing assumptions on the satisfaction of the transversality condition with introducing capital gains taxes, transaction or property taxes, rebate options, and fixed periods of asset usage, rational bubble is shown to be preventable. For an existing bubble, hard- and soft-landings are shown to be possible. Hard landing is defined by a bubble which crashes via financial or tax tools, while soft landing is defined as an increasing bubble reaching some stable value via taxes. Japan, U.S., and Greece experienced real estate bubbles and hard landings, while Taiwan ended its real estate bubble in the 1980s with a soft landing.
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