Endogenous growth cycles in an overlapping generations model with investment gestation lags

Akiomi Kitagawa () and Akihisa Shibata

Economic Theory, 2005, vol. 25, issue 3, 762 pages

Abstract: A simple overlapping generations model with investment gestation lags is constructed. The model shows that, if the technology is of the AK type with capital-deepening externalities, the existence of investment gestation lags always generates permanent cyclical fluctuations in the economic growth rate. The mean growth rate is shown to be positive if the external effect is strong. The model also shows that, if the production technology takes the Cobb-Douglas form, there exists a unique steady state in which the economy exhibits neither cyclical fluctuations nor long-run growth. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: Endogenous growth; Growth cycles; Investment gestation lags; Overlapping generations. (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s00199-003-0458-0

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