Two-Period Cycles in a Three-Period Overlapping Generations Model

Joydeep Bhattacharya and Steven Russell

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We study the properties of two-period monetary cycles in simple pure exchange overlapping generations economies in which the households live for three periods. We demonstrate that these economies can support cycles under a much broader -- and, arguably, more plausible -- range of assumptions than the analogous two-period economies. We show that economies that fail the well-known Grandmont [1985] condition can have cycles, and that economies that satisfy the condition can fail to have cycles. In addition, we show that economies can have monetary cycles when they do not have conventional monetary steady states, and when aggregate demand for assets is not decreasing in the real return rate at a gross real rate of unity.

JEL-codes: D51 E31 E32 E40 (search for similar items in EconPapers)
Date: 2002-03-05
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Citations: View citations in EconPapers (5)

Published in Journal of Economic Theory, April 2003, vol. 109 no. 2, pp. 378-401

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10250

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