Business Cycle Phenomena in Overlapping Generations Economies with Stochastic Production

Zurich IEER Working Paper No. 30

22 Pages Posted: 6 Nov 2000

See all articles by Jens-Ulrich Peter

Jens-Ulrich Peter

Bielefeld University

Klaus Reiner Schenk-Hoppé

University of Manchester - Department of Economics; Norwegian School of Economics (NHH) - Department of Finance

Date Written: December 1999

Abstract

This paper analyzes economic fluctuations in an overlapping generations economy with productive capital in which random shocks in aggregate productivity are present. Under specific assumptions we obtain an explicit solution of the model. Applying random dynamical systems theory, we can prove that the long-run behavior of the economy is uniquely described by an asymptotically stable random fixed point. The statistical properties of the aggregates output, consumption, capital stock, and real wage are investigated numerically. We find that our artificial economy displays several real world business cycle phenomena.

Keywords: overlapping generations, real business cycles, technology shocks, random dynamical

JEL Classification: E32, E37, E21, C62, D91

Suggested Citation

Peter, Jens-Ulrich and Schenk-Hoppé, Klaus Reiner, Business Cycle Phenomena in Overlapping Generations Economies with Stochastic Production (December 1999). Zurich IEER Working Paper No. 30, Available at SSRN: https://ssrn.com/abstract=230012 or http://dx.doi.org/10.2139/ssrn.230012

Jens-Ulrich Peter (Contact Author)

Bielefeld University ( email )

Universitätsstraße 25
Bielefeld, NRW
Germany

Klaus Reiner Schenk-Hoppé

University of Manchester - Department of Economics ( email )

Arthur Lewis Building
Oxford Road
Manchester, M13 9PL
United Kingdom

Norwegian School of Economics (NHH) - Department of Finance ( email )

Helleveien 30
N-5045 Bergen
Norway

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
373
Abstract Views
2,071
rank
93,263
PlumX Metrics