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Power Dynamics: Multiple Equilibria, Cyclical Fluctuations, and Local Stability in Intertemporal General Equilibrium Models

Author

Listed:
  • Gong Guan

    (Institute of Advanced Studies, Wuhan University
    Development Research Group, World Bank)

  • Heng-fu Zou

    (Institute of Advanced Studies, Wuhan University
    Development Research Group, World Bank)

Abstract

Based on the theory of power proposed by John Galbraith, Bertrand Russell and other social scientists, this paper offers two positive intertemporal general equilibrium models to understand: i.) How do rational people decide their optimal consumption, property accumulation, and power? ii.)What causes people to choose different growth path of power? iii.)Why would two people, whose power and wealth endowment levels are quite close, differ so drastically in their future practice? iv.) Why could the rational pursue of power in a "perfect" world is compatible with cyclical power patterns? The simple two-dimensional model considers the dynamic property of power. The second model is an extension of the first model, and analyses the wealth effect on power accumulation. Numerical simulations have provided strong support for our modeling approaches.

Suggested Citation

  • Gong Guan & Heng-fu Zou, 2000. "Power Dynamics: Multiple Equilibria, Cyclical Fluctuations, and Local Stability in Intertemporal General Equilibrium Models," CEMA Working Papers 525, China Economics and Management Academy, Central University of Finance and Economics.
  • Handle: RePEc:cuf:wpaper:525
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    References listed on IDEAS

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    1. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
    2. Medio, Alfredo, 1987. "Oscillations in optimal growth models," Journal of Economic Dynamics and Control, Elsevier, vol. 11(2), pages 201-206, June.
    3. Zou, Heng-fu, 1991. "Socialist economic growth and political investment cycles," European Journal of Political Economy, Elsevier, vol. 7(2), pages 141-157, July.
    4. Palivos, Theodore, 1995. "Endogenous fertility, multiple growth paths, and economic convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1489-1510, November.
    5. Heng-fu Zou, 1995. "The spirit of capitalism and savings behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 28(1), pages 131-143, September.
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