Endogenous growth cycles in an overlapping generations model with investment gestation lags

Akiomi Kitagawa; Akihisa Shibata

doi:10.1007/s00199-003-0458-0

Endogenous growth cycles in an overlapping generations model with investment gestation lags

Akiomi Kitagawa, Akihisa Shibata

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

Abstract

A simple overlapping generations model with investment gestation lags is constructed. The model shows that, if the technology is of the AK type with capital-deepening externalities, the existence of investment gestation lags always generates permanent cyclical fluctuations in the economic growth rate. The mean growth rate is shown to be positive if the external effect is strong. The model also shows that, if the production technology takes the Cobb-Douglas form, there exists a unique steady state in which the economy exhibits neither cyclical fluctuations nor long-run growth.

Original language	English
Pages (from-to)	751-762
Number of pages	12
Journal	Economic Theory
Volume	25
Issue number	3
DOIs	https://doi.org/10.1007/s00199-003-0458-0
Publication status	Published - 2005 Apr 1
Externally published	Yes

Keywords

Endogenous growth
Growth cycles
Investment gestation lags
Overlapping generations

ASJC Scopus subject areas

Economics and Econometrics

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AB - A simple overlapping generations model with investment gestation lags is constructed. The model shows that, if the technology is of the AK type with capital-deepening externalities, the existence of investment gestation lags always generates permanent cyclical fluctuations in the economic growth rate. The mean growth rate is shown to be positive if the external effect is strong. The model also shows that, if the production technology takes the Cobb-Douglas form, there exists a unique steady state in which the economy exhibits neither cyclical fluctuations nor long-run growth.

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