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| Author: | Francois, P. Shi, S. |
| Title: | Innovation, growth, and welfare-improving cycles |
| Journal: | Journal of Economic Theory
1999 : APR, VOL. 85:2, p. 226-257 |
| Index terms: | COMPANIES INVESTMENT WELFARE |
| Language: | eng |
| Abstract: | This paper establishes necessary and sufficient conditions for the existence of stationary cycles in an economy comprising independent investing firms. The economy is not subject to aggregate uncertainty, investors have no direct complementarities, and all agents act independently. The cycle arises due to general equilibrium contemporaneous complementarities between investors devoting resources to innovation which yields temporary profits. With numerical examples the authors show that there are multiple cyclical equilibria that differ in the cycle length. |
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