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| Author: | Goenka, A. Kelly, D. L. Spear, S. E. |
| Title: | Endogenous strategic business cycles |
| Journal: | Journal of Economic Theory
1998 : JUL, VOL. 81:1, p. 97-125 |
| Index terms: | BUSINESS CYCLES GAME THEORY EQUILIBRIUM THEORY MARKETS MODELS |
| Language: | eng |
| Abstract: | The paper examines an overlapping generations version of the Shapley-Shubik market game. Existence of equilibria is shown for the simple one commodity model, and the dynamics of the equilibrium trajectories generated in the model are analyzed. Because of the non-linearities generated by strategic interaction of agents in the model, it is found that complex and chaotic equilibrium dynamics are possible in this model for a much broader range of preferences than those for which Grandmont (1995) found complicated dynamics in the perfectly competitive version of this model. Hence, these results provide an alternative to the usual technology-based explanation for the historical fact that business cycles became an important economic phenomenon only with the onset of industrialization. |
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