Research Repository

ON THE EXISTENCE OF ENDOGENOUS CYCLES

Balasko, Yves and Ghiglino, Christian ON THE EXISTENCE OF ENDOGENOUS CYCLES. [UNSPECIFIED]

Full text not available from this repository.

Abstract

Endogenous business cycles have been known to exist in the overlapping-generations model since quite a long time. The literature seems to imply that these cycles may exist only if individuals show rates of preference for the present that are high enough, and these values have to be so high that they are unrealistic. While this observation is true if preferences are homothetic, we show in this paper that, once the homotheticity requirement is dropped, a sufficient condition for the existence of cycles is that the Engel curve defined for equal prices (therefore taken equal to one) has at least a point where the slope is smaller than one. This condition expresses a mild form of impatience. Given this condition, it is always possible to find a discounted utility function (for any arbitrary given discount rate smaller than one) and positive endowments such that the corresponding overlapping- generations model features cycles of order two.

Item Type: UNSPECIFIED
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2012 17:40
Last Modified: 17 Aug 2017 17:15
URI: http://repository.essex.ac.uk/id/eprint/3034

Actions (login required)

View Item View Item