A General Dynamic Equilibrium Model and Business Cycles
This study generalizes the economic growth model of heterogeneous households proposed by Zhang (2017). Zhang’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 Zhang’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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