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Production Lags and Growth Dynamics in an Overlapping Generations Endogenous Growth Model

Author

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  • Rangan Gupta

    () (Department of Economics, University of Pretoria)

Abstract

This paper analyzes growth dynamics in an endogenous growth overlapping generations model characterized by production lags in the firm-specific and average economywide capital inputs, with the growth process being endogenized by allowing for a production externality. We show that endogenous convergent fluctuations emerge, with the convergence being faster for higher values of the marginal product of labor, given the initial value of the gross growth rate - a result, otherwise impossible, if the production is a function of contemporaneous capital stock. Finally, when production is a function of lagged labor as well as lagged capital inputs, steady-state is infeasible.

Suggested Citation

  • Rangan Gupta, 2010. "Production Lags and Growth Dynamics in an Overlapping Generations Endogenous Growth Model," Working Papers 201024, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:201024
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    Cited by:

    1. Rangan Gupta & Lardo Stander, 2014. "Endogenous Fluctuations in an Endogenous Growth Model with Inflation Targeting," Working Papers 201432, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    Endogenous fluctuations; Overlapping generations; Production lags;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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