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Global Business Cycles in a Neoclassical Growth Model with Spirits of Capitalism

Author

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  • Zhang, Wei-Bin

    (Ritsumeikan Asia Pacific University)

Abstract

The purpose of the paper is to identify business cycles due to exogenous shocks in a global economic growth model with endogenous social status, endogenous preferences, and wealth accumulation. The basic model by Zhang (2017) is built on the basis of the Solow model, the Uzawa two-sector model, the Oniki-Uzawa trade model, and some ideas in the literature of economic growth with endogenous growth. The paper introduces various time-dependent exogenous shocks to Zhang’s model. We show the existence of business cycles with different exogenous periodic shocks. Our comparative dynamic analysis shows, for instance, how exogenous changes in the propensities lead to global business cycles and oscillations in global income and wealth distribution. The unique contribution is to identify real business cycles in the neoclassical growth model with endogenous preference built on microeconomic foundation.

Suggested Citation

  • Zhang, Wei-Bin, 2019. "Global Business Cycles in a Neoclassical Growth Model with Spirits of Capitalism," Bulletin of Economic Theory and Analysis, BETA Journals, vol. 4(1), pages 13-33, June.
    • Handle: RePEc:ris:betajl:0033
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Business Cycles; Exogenous Periodic Shocks; Social Status; Spirit of Capitalism; Global Income Inequality;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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