Local Bifurcations and Global Dynamics in a Solow-type Endogenous Business Cycles Model
AbstractNeoclassical growth models are essentially characterized by the formation of a steady state where the main economic aggregates (capital, output, consumption and investment) do not grow, unless some external event takes place (e.g., technological progress or population growth). Hence, the long term result corresponds to a fixed point and any kind of endogenous fluctuations is ruled out. This paper introduces an inefficiency mechanism through which non perfect firms¡¯ expectations about future demand conduct to underinvestment, which originates periodic and a-periodic long run cycles; this mechanism is applied over the simplest neoclassical growth model, the Solow equation regarding capital accumulation. Results, containing a large variety of dynamic features, are discussed through the analysis of local bifurcations and through numerical examples that give insights about global dynamics.
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.
Bibliographic InfoArticle provided by Society for AEF in its journal Annals of Economics and Finance.
Volume (Year): 7 (2006)
Issue (Month): 1 (May)
Endogenous business cycles; Solow growth model; Nonlinear dynamics; Bifurcations; Chaos;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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.:
- Day, Richard H, 1982. "Irregular Growth Cycles," American Economic Review, American Economic Association, vol. 72(3), pages 406-14, June.
- Stephanie Schmitt-Grohe, 1998.
"Endogenous business cycles and the dynamics of output, hours, and consumption,"
Finance and Economics Discussion Series
1998-19, Board of Governors of the Federal Reserve System (U.S.).
- Stephanie Schmitt-Grohe, 2000. "Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption," American Economic Review, American Economic Association, vol. 90(5), pages 1136-1159, December.
- Stephanie Schmitt-Grohe, 1999. "Endogenous business cycles and the dynamics of output, hours, and consumption," Departmental Working Papers 199915, Rutgers University, Department of Economics.
- Schmitt-Grohé, Stephanie, 1999. "Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption," CEPR Discussion Papers 2315, C.E.P.R. Discussion Papers.
- Lawrence J. Christiano & Sharon G. Harrison, 1996.
"Chaos, sunspots, and automatic stabilizers,"
214, Federal Reserve Bank of Minneapolis.
- Lawrence J. Christiano & Sharon G. Harrison, 1996. "Chaos, sunspots, and automatic stabilizers," Working Paper Series, Macroeconomic Issues WP-96-16, Federal Reserve Bank of Chicago.
- Lawrence J. Christiano & Sharon G. Harrison, 1996. "Chaos, Sunspots, and Automatic Stabilizers," NBER Working Papers 5703, National Bureau of Economic Research, Inc.
- Jordi Caballe & Xavier Jarque & Elisabetta Michetti, 2004.
"Chaotic Dynamics in Credit Constrained Emerging Economies,"
UFAE and IAE Working Papers
605.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Caballe, Jordi & Jarque, Xavier & Michetti, Elisabetta, 2006. "Chaotic dynamics in credit constrained emerging economies," Journal of Economic Dynamics and Control, Elsevier, vol. 30(8), pages 1261-1275, August.
- Jordi Caballé & Xavier Jarque & Elisabetta Michetti, 2004. "Chaotic Dynamics in Credit Constrained Emerging Economies," Working Papers 121, Barcelona Graduate School of Economics.
- Kydland, Finn E & Prescott, Edward C, 1982.
"Time to Build and Aggregate Fluctuations,"
Econometric Society, vol. 50(6), pages 1345-70, November.
- Finn E. Kydland & Edward C. Prescott, 1982. "Executable program for "Time to Build and Aggregate Fluctuations"," QM&RBC Codes 4, Quantitative Macroeconomics & Real Business Cycles.
- Finn E. Kydland & Edward C. Prescott, 1982. "Web interface for "Time to Build and Aggregate Fluctuations"," QM&RBC Codes 4a, Quantitative Macroeconomics & Real Business Cycles.
- Medio,Alfredo & Lines,Marji, 2001. "Nonlinear Dynamics," Cambridge Books, Cambridge University Press, number 9780521551861, November.
- Leo Kaas & Stefan Zink, 2007. "Human Capital and Growth Cycles," Economic Theory, Springer, vol. 31(1), pages 19-33, April.
- Khan, M. Ali & Mitra, Tapan, 2004.
"On Topological Chaos in the Robinson-Solow-Srinivasan Model,"
04-18, Cornell University, Center for Analytic Economics.
- Khan, M. Ali & Mitra, Tapan, 2005. "On topological chaos in the Robinson-Solow-Srinivasan model," Economics Letters, Elsevier, vol. 88(1), pages 127-133, July.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
- Bohm, Volker & Kaas, Leo, 2000. "Differential savings, factor shares, and endogenous growth cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 24(5-7), pages 965-980, June.
- Boldrin, Michele & Montrucchio, Luigi, 1986. "On the indeterminacy of capital accumulation paths," Journal of Economic Theory, Elsevier, vol. 40(1), pages 26-39, October.
- Long, John B, Jr & Plosser, Charles I, 1983. "Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 91(1), pages 39-69, February.
- Boldrin, Michele & Nishimura, Kazuo & Shigoka, Tadashi & Yano, Makoto, 2001. "Chaotic Equilibrium Dynamics in Endogenous Growth Models," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 97-132, January.
- Nishimura, Kazuo & Yano, Makoto, 1994. "Optimal Chaos, Nonlinearity and Feasibility Conditions," Economic Theory, Springer, vol. 4(5), pages 689-704, August.
- Jang-Ting Guo & Kevin Lansing, 1999.
"Fiscal policy, increasing returns, and endogenous fluctuations,"
Working Papers in Applied Economic Theory
99-08, Federal Reserve Bank of San Francisco.
- Guo, Jang-Ting & Lansing, Kevin J., 2002. "Fiscal Policy, Increasing Returns, And Endogenous Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 6(05), pages 633-664, November.
- Deneckere, Raymond & Pelikan, Steve, 1986. "Competitive chaos," Journal of Economic Theory, Elsevier, vol. 40(1), pages 13-25, October.
- Grandmont Jean-michel, 1983.
"On endogenous competitive business cycles,"
CEPREMAP Working Papers (Couverture Orange)
- Mitra, Tapan & Nishimura, Kazuo, 2001. "Discounting and Long-Run Behavior: Global Bifurcation Analysis of a Family of Dynamical Systems," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 256-293, January.
- Mitra, Tapan, 1996. "An Exact Discount Factor Restriction for Period-Three Cycles in Dynamic Optimization Models," Journal of Economic Theory, Elsevier, vol. 69(2), pages 281-305, May.
- Benhabib, Jess & Day, Richard H, 1981. "Rational Choice and Erratic Behaviour," Review of Economic Studies, Wiley Blackwell, vol. 48(3), pages 459-71, July.
- Nishimura, Kazuo & Yano, Makoto, 1995. "Nonlinear Dynamics and Chaos in Optimal Growth: An Example," Econometrica, Econometric Society, vol. 63(4), pages 981-1001, July.
- Mitra, Tapan, 2001. "A Sufficient Condition for Topological Chaos with an Application to a Model of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 133-152, January.
- Giovanni Dosi & Giorgio Fagiolo & Andrea Roventini, 2005. "Animal Spirits, Lumpy Investment, and Endogenous Business Cycles," LEM Papers Series 2005/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Nishimura, Kazuo & Sorger, Gerhard & Yano, Makoto, 1994. "Ergodic Chaos in Optimal Growth Models with Low Discount Rates," Economic Theory, Springer, vol. 4(5), pages 705-17, August.
- Gomes, Orlando, 2007. "Externalities in R&D: a route to endogenous fluctuations," MPRA Paper 2850, University Library of Munich, Germany.
- Gomes, Orlando, 2008.
"Too much of a good thing: Endogenous business cycles generated by bounded technological progress,"
Elsevier, vol. 25(5), pages 933-945, September.
- Gomes, Orlando, 2006. "Too much of a good thing: endogenous business cycles generated by bounded technological progress," MPRA Paper 2845, University Library of Munich, Germany.
- Orlando Gomes, 2008.
"Decentralized Allocation of Human Capital and Nonlinear Growth,"
Society for Computational Economics, vol. 31(1), pages 45-75, February.
- Gomes, Orlando, 2007. "Decentralized allocation of human capital and nonlinear growth," MPRA Paper 2882, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao).
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.