Abstract
This paper presents a simple overlapping generations model of endogenous business cycles, in which cycles emerge as a result of long gestation of investment. The key mechanism to generate cycles in this model can be regarded as a "linearity", rather than non-linearities resulting from non-convexities in technology or preference, asymmetric information in financial markets, multi-sectors of production, or the existence of paper assets, which have played a crucial role in the previous literature. Moreover, if the return on investment technology is sufficiently low, the economy has indeterminate equilibria, each of which converges to a distinct n-period cycle.
Original language | English |
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Pages (from-to) | 99-127 |
Number of pages | 29 |
Journal | Journal of Mathematical Economics |
Volume | 35 |
Issue number | 1 |
DOIs | |
Publication status | Published - 2001 Feb 1 |
Externally published | Yes |
Keywords
- B13
- E32
- Endogenous cycles
- Indeterminacy of equilibria
- Linearity
- Long gestations of investment
ASJC Scopus subject areas
- Economics and Econometrics
- Applied Mathematics