Time-to-Build and Cycles

28 Pages Posted: 11 Jun 2000 Last revised: 1 Aug 2021

See all articles by Patrick K. Asea

Patrick K. Asea

affiliation not provided to SSRN

Paul J. Zak

Claremont Graduate University - Center for Neuroeconomics Studies

Date Written: May 1997

Abstract

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.

Suggested Citation

Asea, Patrick K. and Zak, Paul J., Time-to-Build and Cycles (May 1997). NBER Working Paper No. t0211, Available at SSRN: https://ssrn.com/abstract=226619

Patrick K. Asea (Contact Author)

affiliation not provided to SSRN

No Address Available

Paul J. Zak

Claremont Graduate University - Center for Neuroeconomics Studies ( email )

160 E. 10th St.
Claremont, CA 91711-6165
United States

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