Equilibrium cycling with small discounting

Jess Benhabib; Aldo Rustichini

doi:10.1016/0022-0531(90)90040-Q

Equilibrium cycling with small discounting

Jess Benhabib, Aldo Rustichini

Economics (Twin Cities)

Research output: Contribution to journal › Article › peer-review

30 Scopus citations

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 language	English (US)
Pages (from-to)	423-432
Number of pages	10
Journal	Journal of Economic Theory
Volume	52
Issue number	2
DOIs	https://doi.org/10.1016/0022-0531(90)90040-Q
State	Published - Dec 1990

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title = "Equilibrium cycling with small discounting",

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.",

author = "Jess Benhabib and Aldo Rustichini",

year = "1990",

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Equilibrium cycling with small discounting

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