BUSINESS CYCLES, GROWTH, AND IMPORTED ENERGY IN A SMALL-OPEN GROWTH MODEL

Wei-Bin Zhang

Oradea Journal of Business and Economics, 2018, vol. 3, issue 2, 7-21

Abstract: This paper generalizes an economic growth model proposed by Zhang (2017) by allowing all constant coefficients to be time-dependent. This paper shows existence of business cycles in the generalized model due to periodic shocks. Zhang’s original model is developed for a small open economy with imported energy and imported goods. The economy is composed of two sectors and all markets are perfectly competitive. The economy has fixed land and population. Production side is the same as in neoclassical growth theory, while demand side is modelling with Zhang’s utility and concept of disposable income. We generalize and simulate the model. We demonstrate existence of business cycles due to different exogenous periodic shocks.

Keywords: business cycles; price of energy; price of imported goods; land distribution; propensity to save; small open economy. (search for similar items in EconPapers)
JEL-codes: F43 L83 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ora:jrojbe:v:3:y:2018:i:2:p:7-21

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