Time-to-Build and Cycles
Patrick K. Asea
affiliation not provided to SSRN
Paul J. Zak
Claremont Graduate University - Center for Neuroeconomics Studies
NBER Working Paper No. t0211
We analyze the dynamics of a simple growth model in which production occurs with a delay while new capital is installed (time-to-build). The time-to-build technology is shown to yield a system of functional (delay) differential equations with a unique steady state. We demonstrate that the steady state, though typically a saddle, may exhibit Hopf cycles on a measurable set of the parameter space. Furthermore, the optimal path to the steady state is oscillatory. A counter-example to the claim that intrinsically oscillatory on the central technical apparatus the mathematics of functional differential equations.
Number of Pages in PDF File: 28working papers series
Date posted: June 11, 2000
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