Long gestation in an overlapping generations economy: Endogenous cycles and indeterminacy of equilibria

Akiomi Kitagawa, Akihisa Shibata

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)

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 languageEnglish
Pages (from-to)99-127
Number of pages29
JournalJournal of Mathematical Economics
Volume35
Issue number1
DOIs
Publication statusPublished - 2001 Feb 1
Externally publishedYes

Keywords

  • B13
  • E32
  • Endogenous cycles
  • Indeterminacy of equilibria
  • Linearity
  • Long gestations of investment

ASJC Scopus subject areas

  • Economics and Econometrics
  • Applied Mathematics

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