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Business Cycle Phenomena in Overlapping Generations Economies with Stochastic Production

  • Jens-Ulrich Peter
  • Klaus Reiner Schenk-Hoppé

This paper analyzes economic fluctuations in an overlapping generations economy with productive capital in which random shocks in aggregate productivity are present. Under specific assumptions we obtain an explicit solution of the model. Applying random dynamical systems theory, we can prove that the long-run behavior of the economy is uniquely described by an asymptotically stable random fixed point. The statistical properties of the aggregates output, consumption, capital stock, and real wage are investigated numerically. find that our artificial economy displays several real world business cycle phenomena.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 030.

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Handle: RePEc:zur:iewwpx:030
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  1. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  2. Armin Falk & Ernst Fehr & Urs Fischbacher, . "On the Nature of Fair Behavior," IEW - Working Papers 017, Institute for Empirical Research in Economics - University of Zurich.
  3. Bruno S. Frey & Alois Stutzer, . "Maximising Happiness?," IEW - Working Papers 022, Institute for Empirical Research in Economics - University of Zurich.
  4. Bruno S. Frey & Marcel Kucher & Alois Stutzer, . "Outcome, Process & Power in Direct Democracy," IEW - Working Papers 025, Institute for Empirical Research in Economics - University of Zurich.
  5. Bruno S. Frey & Reto Jegen, 2000. "Motivation Crowding Theory: A Survey of Empirical Evidence," CESifo Working Paper Series 245, CESifo Group Munich.
  6. Josef Falkinger & Ernst Fehr & Simon Gaechter, . "A Simple Mechanism for the Efficient Provision of Public Goods - Experimental Evidence," IEW - Working Papers 003, Institute for Empirical Research in Economics - University of Zurich.
  7. Bruno S. Frey & Alois Stutzer, . "Happiness, Economy and Institutions," IEW - Working Papers 015, Institute for Empirical Research in Economics - University of Zurich.
  8. Bruno S. Frey & Lorenz Goette, . "Does Pay Motivate Volunteers?," IEW - Working Papers 007, Institute for Empirical Research in Economics - University of Zurich.
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