Abstract
This study presents a two-sector optimal growth model with Cobb-Douglas production functions in which optimal dynamics exhibits sharp non-linearity giving rise to cyclical optimal paths. This result demonstrates that such optimal paths may appear for any value of the discount factor of future utilities. Moreover, once a cyclical optimal path appears for a particular value, it appears for any value that discounts the future utilities stronger than that particular value.
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© 1995 Springer-Verlag Berlin Heidelberg
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Nishimura, K., Yano, M. (1995). Non-Linearity and Business Cycles in a Two-Sector Equilibrium Model: An Example with Cobb-Douglas Production Functions. In: Maruyama, T., Takahashi, W. (eds) Nonlinear and Convex Analysis in Economic Theory. Lecture Notes in Economics and Mathematical Systems, vol 419. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-48719-4_18
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DOI: https://doi.org/10.1007/978-3-642-48719-4_18
Publisher Name: Springer, Berlin, Heidelberg
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