Polarization and Permanent Fluctuations: Quasi-Periodic Motions in a Two-Class OLG Model (Revised version with a new title "Quasi-Periodic Motions in a Polarized Overlapping Generations Model with Technology Choice." KIER DP No.1070）

Takao Asano (), Akihisa Shibata and Masanori Yokoo ()
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Takao Asano: Okayama University
Masanori Yokoo: Okayama University

No 1063, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: This paper constructs a simple overlapping generations (OLG) model with the working and capitalist classes and two types of production technologies. The behavior of agents belonging to the working class is basically the same as that in the standard Diamond (1965) type OLG model, whereas agents belonging to the capitalist class face two available technologies, select the one with a higher return on capital, and bequeath their assets to the next generation without supplying labor. We show that in an extreme case, in which one technology is linear and the other is of the Leontief type, the dynamics of capital stock supplied by the capitalist class, which can be interpreted as public debt, is characterized by a rigid rotation on the circle, giving rise to quasi-periodic motions for a large set of parameter values.

Keywords: Endogenous business cycles; technology choice; quasi-periodic motion; OLG model (search for similar items in EconPapers)
Pages: 35pages
Date: 2021-06
New Economics Papers: this item is included in nep-dge and nep-mac
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