Equilibrium cycling with small discounting

Jess Benhabib, Aldo Rustichini

    Research output: Contribution to journalArticle

    Abstract

    A misinterpretation of turnpike theorems suggests that persistent cyclic behavior in optimal growth models is only possible with large discount rates. This paper shows that for any positive discount rate there exists a large family of standard Cobb-Douglas technologies with three sectors which have optimal growth paths of persistent cycles.

    Original languageEnglish (US)
    Pages (from-to)423-432
    Number of pages10
    JournalJournal of Economic Theory
    Volume52
    Issue number2
    DOIs
    StatePublished - Dec 1990

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    ASJC Scopus subject areas

    • Economics and Econometrics

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