A General Dynamic Equilibrium Model and Business Cycles
Keywords:business cycle, periodic shocks, general equilibrium theory, neoclassical growth theory, integrated theory
This study generalizes the economic growth model of heterogeneous households proposed by Zhang (2017). Zhangâ€™s model is built on Ricardian theory of distribution, Walrasian general equilibrium theory, and neoclassical growth theory. The heterogeneous-household economy is composed of a consumer goods sector, an agricultural goods sector, and one capital goods sector. Technology, land, population and human capital are exogenous. This paper generalizes Zhangâ€™s model by allowing constant coefficients to be time-dependent. We show the existence of business cycles due to different exogenous oscillatory changes
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