Can social interaction contribute to explain business cycles?
AbstractRecent literature has been able to include into standard optimal growth models some hypotheses that allow for the generation of endogenous long run fluctuations. This paper contributes to this endogenous business cycles literature by considering social interactions. In the proposed model, individuals can choose, under a discrete choice rule, to which social group they prefer to belong to. This selection process is constrained essentially by the dimension of the group, which is the main determinant regarding the utility individuals withdraw from social interaction. The proposed setup implies the presence of cycles and chaotic motion describing the evolution of group dimension over time. Because being member of a group involves costs to households, the inclusion of these costs in a standard Ramsey growth model will imply that endogenous cycles might arise in the time trajectory of the growth rate of output.
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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2848.
Date of creation: Oct 2006
Date of revision:
Social interaction; Business cycles; Growth models; Nonlinear dynamics and Chaos; Discrete choice;
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
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-28 (All new papers)
- NEP-DCM-2007-04-28 (Discrete Choice Models)
- NEP-MAC-2007-04-28 (Macroeconomics)
- NEP-SOC-2007-04-28 (Social Norms & Social Capital)
- NEP-URE-2007-04-28 (Urban & Real Estate Economics)
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.:
- Lawrence J. Christiano & Sharon G. Harrison, 1996.
"Chaos, Sunspots, and Automatic Stabilizers,"
NBER Working Papers
5703, National Bureau of Economic Research, Inc.
- 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," Staff Report 214, Federal Reserve Bank of Minneapolis.
- Christopher W. Crowe, 2006.
"Inflation, Inequality, and Social Conflict,"
IMF Working Papers
06/158, International Monetary Fund.
- Christopher Crowe, 2004. "Inflation, Inequality and Social Conflict," CEP Discussion Papers dp0657, Centre for Economic Performance, LSE.
- Chris Crowe, 2004. "Inflation, Inequality and Social Conflict," Money Macro and Finance (MMF) Research Group Conference 2004 69, Money Macro and Finance Research Group.
- Benabou, Roland, 1993.
"Workings of a City: Location, Education, and Production,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(3), pages 619-52, August.
- Roland Benabou, 1991. "Workings of a City: Location, Education, and Production," NBER Technical Working Papers 0113, National Bureau of Economic Research, Inc.
- 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.
- Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2004.
"Social Interaction and Stock-Market Participation,"
Journal of Finance,
American Finance Association, vol. 59(1), pages 137-163, 02.
- Cellarier, Laurent, 2006. "Constant gain learning and business cycles," Journal of Macroeconomics, Elsevier, vol. 28(1), pages 51-85, March.
- repec:cup:macdyn:v:6:y:2002:i:5:p:633-64 is not listed on IDEAS
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.