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.
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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
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