Can There Be Short-Period Deterministic Cycles When People Are Long Lived?
AbstractThis paper considers whether short-period deterministic cycles can exist in a class of stationary overlapping generations models with long- (but finite-) lived agents. It shows that if agents discount the future positively, then as life spans get large, nonmonetary cycles will disappear. Further, neither constant monetary steady states, nor stationary monetary cycles, can exist. It also shows that if agents discount the future negatively, then there are robust examples in which constant monetary steady states, as well as stationary monetary cycles, (with undiminished amplitude) can occur no matter how long agents live. Copyright 1989, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 104 (1989)
Issue (Month): 1 (February)
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Other versions of this item:
- S. Rao Aiyagari, 1988. "Can there be short-period deterministic cycles when people are long lived?," Staff Report 114, Federal Reserve Bank of Minneapolis.
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- Woodford, Michael, 1986. "Stationary sunspot equilibria in a finance constrained economy," Journal of Economic Theory, Elsevier, vol. 40(1), pages 128-137, October.
- Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
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- S. Rao Aiyagari, 1987.
"Nonmonetary steady states in stationary overlapping generations models with long lived agents and discounting: multiplicity, optimality, and consumption smoothing,"
325, Federal Reserve Bank of Minneapolis.
- Rao Aiyagari, S., 1988. "Nonmonetary steady states in stationary overlapping generations models with long lived agents and discounting: Multiplicity, optimality, and consumption smoothing," Journal of Economic Theory, Elsevier, vol. 45(1), pages 102-127, June.
- Azariadis, Costas, 1981. "Self-fulfilling prophecies," Journal of Economic Theory, Elsevier, vol. 25(3), pages 380-396, December.
- Cass, David & Shell, Karl, 1983. "Do Sunspots Matter?," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 193-227, April.
- Grandmont, Jean-Michel, 1985. "On Endogenous Competitive Business Cycles," Econometrica, Econometric Society, vol. 53(5), pages 995-1045, September.
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