AbstractCapital gains play an important, positive role in the inter-temporal allocation of resources, but they can also be a source of economic instability. We analyze a simple overlapping-generations economy with two capital goods and irreversible investment. For each vector of initial capital/labor ratios, there is one and only one trajectory on which expectations are realized at every date. If there is any deviation from this trajectory, then there is a bubble which must burst in finite time.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The International Society for Economic Theory in its journal International Journal of Economic Theory.
Volume (Year): 2 (2006)
Issue (Month): 3-4 ()
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1742-7355
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aguiar-Conraria, Luis & Shell, Karl, 2006.
06-02, Cornell University, Center for Analytic Economics.
- Grandmont, Jean-Michel, 1993.
"Temporary general equilibrium theory,"
Handbook of Mathematical Economics,
in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 19, pages 879-922
- K. Shell, 1968. "Applications of Pontryagin's Maximum Principle of Economics," Working papers 16, Massachusetts Institute of Technology (MIT), Department of Economics.
- GRANDMONT, Jean-Michel & HILDENBRAND, Werner, .
"Stochastic processes of temporary equilibria,"
CORE Discussion Papers RP
-206, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Grandmont Jean-michel, 1983.
"On endogenous competitive business cycles,"
CEPREMAP Working Papers (Couverture Orange)
- K. Shell & M. Sidrauski & J. E. Stiglitz, 1967.
"Capital Gains, Income, and Saving,"
12, Massachusetts Institute of Technology (MIT), Department of Economics.
- Caton, C & Shell, Karl, 1971. "An Exercise in the Theory of Heterogeneous Capital Accumulation," Review of Economic Studies, Wiley Blackwell, vol. 38(113), pages 13-22, January.
- Magill, Michael & Quinzii, Martine, 2003. "Nonshiftable capital, affine price expectations and convergence to the Golden Rule," Journal of Mathematical Economics, Elsevier, vol. 39(3-4), pages 239-272, June.
- Benhabib Jess & Rustichini Aldo, 1994. "Introduction to the Symposium on Growth, Fluctuations, and Sunspots: Confronting the Data," Journal of Economic Theory, Elsevier, vol. 63(1), pages 1-18, June.
- Atkinson, Anthony B, 1969. "The Timescale of Economic Models: How Long Is the Long Run?," Review of Economic Studies, Wiley Blackwell, vol. 36(106), pages 137-52, April.
- Roger Haefen, 2008. "Latent Consideration Sets and Continuous Demand Systems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(3), pages 363-379, November.
- Basu, Kaushik, 2010.
"A marketing scheme for making money off innocent people: A user's manual,"
Elsevier, vol. 107(2), pages 122-124, May.
- Basu, Kaushik, 2009. "A Marketing Scheme for Making Money off Innocent People: A User's Manual," Working Papers 09-09, Cornell University, Center for Analytic Economics.
- Kaushik Basu, 2009. "A Marketing Scheme for Making Money off Innocent People: A User’s Manual," Working Papers id:2341, eSocialSciences.
- Luís Aguiar-Conraria & Karl Shell, 2006.
International Journal of Economic Theory,
The International Society for Economic Theory, vol. 2(3-4), pages 331-349.
- Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2010.
"Resurrecting Equilibria Through Cycles in an Overlapping Generations Model of Money,"
Staff General Research Papers
32099, Iowa State University, Department of Economics.
- Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2010. "Resurrecting equilibria through cycles in an overlapping generations model of money," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 515-526, June.
- Richard C. Barnett & Joydeep Bhattacharya & Helle Bunzel, 2007. "Resurrecting Equilibria Through Cycles," Economics Working Papers 2007-12, School of Economics and Management, University of Aarhus.
- Barnett, Richard C. & Bhattacharya, Joydeep & Bunzel, Helle, 2007. "Minimum Consumption Requirements and Cycles in an Overlapping Generations Model of Money," Staff General Research Papers 12834, Iowa State University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.