Endogenous strategic business cycles

Aditya Goenka, David Kelly, Stephen E. Spear

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

This paper examines an overlapping generations version of the Shapley-Shubik market game. We show existence of equilibria for the simple one commodity model and analyze the dynamics of the equilibrium trajectories generated in the model. Because of the non-linearities generated by strategic interaction of agents in the model, we find that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which Grandmont (Econometrica 53, No. 5 (1995), 995-1045) found complicated dynamics in the perfectly competitive version of this model. These results, then, provide an alternative to the usual technology-based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization. Journal of Economic Literature Classification Numbers: C72, C73, D51, L16.

Original languageEnglish (US)
Pages (from-to)97-125
Number of pages29
JournalJournal of Economic Theory
Volume81
Issue number1
DOIs
StatePublished - Jan 1 1998

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Business cycles
Economics
Dynamic equilibrium
Nonlinearity
Industrialization
Overlapping generations
Commodities
Trajectory
Strategic interaction
Existence of equilibrium
Market games

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Endogenous strategic business cycles. / Goenka, Aditya; Kelly, David; Spear, Stephen E.

In: Journal of Economic Theory, Vol. 81, No. 1, 01.01.1998, p. 97-125.

Research output: Contribution to journalArticle

Goenka, Aditya ; Kelly, David ; Spear, Stephen E. / Endogenous strategic business cycles. In: Journal of Economic Theory. 1998 ; Vol. 81, No. 1. pp. 97-125.
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