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Polarization and Permanent Fluctuations: Quasi-Periodic Motions in a Two-Class OLG Model (Revised version with a new title "Quasi-Periodic Motions in a Polarized Overlapping Generations Model with Technology Choice." KIER DP No.1070）

Author

Listed:
  • Takao Asano

    (Okayama University)

  • Akihisa Shibata

    (Kyoto University)

  • Masanori Yokoo

    (Okayama University)

Abstract

This paper constructs a simple overlapping generations (OLG) model with the working and capitalist classes and two types of production technologies. The behavior of agents belonging to the working class is basically the same as that in the standard Diamond (1965) type OLG model, whereas agents belonging to the capitalist class face two available technologies, select the one with a higher return on capital, and bequeath their assets to the next generation without supplying labor. We show that in an extreme case, in which one technology is linear and the other is of the Leontief type, the dynamics of capital stock supplied by the capitalist class, which can be interpreted as public debt, is characterized by a rigid rotation on the circle, giving rise to quasi-periodic motions for a large set of parameter values.

Suggested Citation

  • Takao Asano & Akihisa Shibata & Masanori Yokoo, 2021. "Polarization and Permanent Fluctuations: Quasi-Periodic Motions in a Two-Class OLG Model (Revised version with a new title "Quasi-Periodic Motions in a Polarized Overlapping Generations Model wit," KIER Working Papers 1063, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1063
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    References listed on IDEAS

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    11. Asano, Takao & Yokoo, Masanori, 2019. "Chaotic dynamics of a piecewise linear model of credit cycles," Journal of Mathematical Economics, Elsevier, vol. 80(C), pages 9-21.
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    Keywords

    Endogenous business cycles; technology choice; quasi-periodic motion; OLG model;
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