Equilibrium cycling with small discounting

Jess Benhabib, Aldo Rustichini

Research output: Contribution to journalArticlepeer-review

29 Scopus citations


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
Issue number2
StatePublished - Dec 1990


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