Imperfect Demand Expectations and Endogenous Business Cycles
Optimal growth models aim at explaining long run trends of growth under the strong assumption of full efficiency in the allocation of resources. As a result, the steady state time paths of the main economic aggregates reflect constant, exogenous or endogenous, growth. To introduce business cycles in this optimality structure one has to consider some source of inefficiency. By assuming that firms adopt a simple non optimal rule to predict future demand, we let investment decisions to depart from the ones that would guarantee the total efficiency outcome. The new investment hypothesis is considered under three growth setups (the simple one equation Solow model of capital accumulation, the Ramsey model with consumption utility maximization, and a two sector endogenous growth setup); for each one of the models, we find that endogenous business cycles of various orders (regular and irregular) are observable
|Date of creation:||02 Feb 2007|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.essex.ac.uk/afm/mmf/index.html|
References listed on IDEAS
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.:
- James B. Bullard & Alison Butler, 1992.
"Nonlinearity and chaos in economic models: implications for policy decisions,"
1991-002, Federal Reserve Bank of St. Louis.
- Bullard, James & Butler, Alison, 1993. "Nonlinearity and Chaos in Economic Models: Implications for Policy Decisions," Economic Journal, Royal Economic Society, vol. 103(419), pages 849-67, July.
- Aghion, P. & Howitt, P., 1989.
"A Model Of Growth Through Creative Destruction,"
527, Massachusetts Institute of Technology (MIT), Department of Economics.
- Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
- Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
- Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
- Kydland, Finn E & Prescott, Edward C, 1982.
"Time to Build and Aggregate Fluctuations,"
Econometric Society, vol. 50(6), pages 1345-70, November.
- Finn E. Kydland & Edward C. Prescott, 1982. "Web interface for "Time to Build and Aggregate Fluctuations"," QM&RBC Codes 4a, Quantitative Macroeconomics & Real Business Cycles.
- Finn E. Kydland & Edward C. Prescott, 1982. "Executable program for "Time to Build and Aggregate Fluctuations"," QM&RBC Codes 4, Quantitative Macroeconomics & Real Business Cycles.
- Robert G. King & Sergio T. Rebelo, 2000.
"Resuscitating Real Business Cycles,"
RCER Working Papers
467, University of Rochester - Center for Economic Research (RCER).
- Baumol, William J. & Benhabib, Jess, 1987.
"Chaos: Significance, Mechanism, and Economic Applications,"
87-16, C.V. Starr Center for Applied Economics, New York University.
- Baumol, William J & Benhabib, Jess, 1989. "Chaos: Significance, Mechanism, and Economic Applications," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 77-105, Winter.
- Danthine, Jean-Pierre & Donaldson, John B. & Johnsen, Thore, 1998.
"Productivity growth, consumer confidence and the business cycle,"
European Economic Review,
Elsevier, vol. 42(6), pages 1113-1140, June.
- Danthine, Jean-Pierre & Donaldson, John B & Johnsen, Thore, 1998. "Productivity Growth, Consumer Confidence and the Business Cycle," CEPR Discussion Papers 1779, C.E.P.R. Discussion Papers.
- Jean-Pierre DANTHINE & John B. DONALDSON & Thore JOHNSEN, 1997. "Productivity Growth, Consumer Confidence and the Business Cycle," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9711, Université de Lausanne, Faculté des HEC, DEEP.
- repec:cup:macdyn:v:6:y:2002:i:5:p:633-64 is not listed on IDEAS
- Guo, Jang-Ting & Lansing, Kevin J., 2002.
"Fiscal Policy, Increasing Returns, And Endogenous Fluctuations,"
Cambridge University Press, vol. 6(05), pages 633-664, November.
- 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.
- 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," Staff Report 214, Federal Reserve Bank of Minneapolis.
- 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.
- Day, Richard H, 1982. "Irregular Growth Cycles," American Economic Review, American Economic Association, vol. 72(3), pages 406-14, June.
- Boldrin, Michele & Woodford, Michael, 1990.
"Equilibrium models displaying endogenous fluctuations and chaos : A survey,"
Journal of Monetary Economics,
Elsevier, vol. 25(2), pages 189-222, March.
- Michele Boldrin & Michael Woodford, 1988. "Equilibruim Models Displaying Endogenous Fluctuations and Chaos: A Survey," UCLA Economics Working Papers 530, UCLA Department of Economics.
- King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
- Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
- Carl Chiarella, 1992. "Developments in Nonlinear Economic Dynamics: Past, Present and Future," Working Paper Series 14, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
When requesting a correction, please mention this item's handle: RePEc:mmf:mmfc06:127. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.