A simple model of growth cycles with technology choice
Yosuke Umezuki and
Masanori Yokoo
Journal of Economic Dynamics and Control, 2019, vol. 100, issue C, 164-175
Abstract:
In this study, we develop a simple, computable overlapping generations model that exhibits endogenous fluctuations. The key assumption is that a firm can choose from multiple technologies of production. Since the model reduces to a piecewise linear map on the unit interval, it allows us to conduct an in-depth analysis of its dynamic properties. Particularly, this piecewise linearization reveals the ability of the model to exhibit periodic attracting cycles of an arbitrarily large period as well as non-periodic attractors. Furthermore, it is demonstrated that the occurrence of periodic patterns is completely characterized by the rotation number or the “devil’s staircase.”
Keywords: Technology choice; Piecewise linearity; Endogenous fluctuations; Overlapping generations model; Rotation number; Devil’s staircase (search for similar items in EconPapers)
JEL-codes: C62 E32 O14 O41 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:100:y:2019:i:c:p:164-175
DOI: 10.1016/j.jedc.2018.11.006
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