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Business Cycles in a Three-sector Growth Model with Portfolio Equilibrium between Land, Gold and Capital

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  • Wei-Bin Zhang

    (Wei-Bin Zhang is at the Ritsumeikan Asia Pacific University, Japan, email: wbz1@apu.ac.jp)

Abstract

This study generalises a growth model proposed by Zhang (2016) through allowing all the time-dependent variables to be time-dependent. Zhang’s model deals with dynamic interdependence between capital accumulation and environmental change, with portfolio equilibrium among land, gold and physical wealth in a multi-sector general equilibrium framework. The model explains the dynamics of prices, rents and distribution of land, gold, physical wealth and environmental change on the basis of micro-economic foundation. This article generalises the model to explain business cycles due to different exogenous shocks. We simulate the motion of the economy and conduct comparative dynamic analysis to demonstrate business cycles due to periodic oscillations in the propensity to use gold, the propensity to consume housing, the propensity to consume industrial goods, the propensity to consume agricultural goods, the propensity to save, and the tax rate on the consumption of industrial goods. JEL Classification: O41, D41, E32

Suggested Citation

  • Wei-Bin Zhang, 2018. "Business Cycles in a Three-sector Growth Model with Portfolio Equilibrium between Land, Gold and Capital," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 12(2), pages 171-196, May.
    • Handle: RePEc:sae:mareco:v:12:y:2018:i:2:p:171-196
    DOI: 10.1177/0973801017753284
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    References listed on IDEAS

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    1. Fabien Prieur, 2009. "The environmental Kuznets curve in a world of irreversibility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(1), pages 57-90, July.
    2. Hans Brems, 1970. "Ricardo's Long-Run Equilibrium," History of Political Economy, Duke University Press, vol. 2(2), pages 225-245, Fall.
    3. Wei-Bin Zhang, 2016. "Portfolio Equilibrium between Land, Gold, and Capital in a Growth Model with Agricultural, Industrial and Environmental Sectors," Economic Research Guardian, Weissberg Publishing, vol. 6(1), pages 18-44, June.
    4. Bordo, Michael David & Ellson, Richard Wayne, 1985. "A model of the classical gold standard with depletion," Journal of Monetary Economics, Elsevier, vol. 16(1), pages 109-120, July.
    5. María‐José Gutiérrez, 2008. "Dynamic Inefficiency in an Overlapping Generation Economy with Pollution and Health Costs," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(4), pages 563-594, August.
    6. Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
    7. Luigi L. Pasinetti, 1960. "A Mathematical Formulation of the Ricardian System," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 27(2), pages 78-98.
    8. Chappell, David & Dowd, Kevin, 1997. "A Simple Model of the Gold Standard," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 94-105, February.
    9. Kevin Dowd & Anthony A. Sampson, 1993. "A New Model of the Gold Standard," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 380-391, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Business Cycles; Periodic Perturbations; Land Value; Gold Value; Environmental Change; Wealth Accumulation;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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