Threshold nonlinearities and asymmetric endogenous business cycles

Junichiro Ishida, Masanori Yokoo

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This paper presents a model of endogenous business cycles in the presence of knowledge spillovers and a time-to-build restriction. There are two key assumptions that characterize the model: (i) the payoff to each firm depends on the aggregate state of knowledge, and (ii) the innovation of a project is time-consuming. Under those assumptions, a simple structure is shown to be described by a piecewise linear difference equation with a discontinuity. We show that the resulting dynamics generated by such a dynamical system leads to an asymmetric periodic cycle of arbitrary period that appears to switch repeatedly between different regimes.

Original languageEnglish
Pages (from-to)175-189
Number of pages15
JournalJournal of Economic Behavior and Organization
Volume54
Issue number2
DOIs
Publication statusPublished - Jun 2004

Fingerprint

Endogenous business cycles
Threshold nonlinearity
Innovation
Discontinuity
Dynamical systems
Time to build
Knowledge spillovers

Keywords

  • Asymmetric periodic cycles
  • Knowledge spillovers
  • Piecewise linear difference equation
  • Threshold nonlinearities
  • Time-to-build

ASJC Scopus subject areas

  • Organizational Behavior and Human Resource Management
  • Economics and Econometrics

Cite this

Threshold nonlinearities and asymmetric endogenous business cycles. / Ishida, Junichiro; Yokoo, Masanori.

In: Journal of Economic Behavior and Organization, Vol. 54, No. 2, 06.2004, p. 175-189.

Research output: Contribution to journalArticle

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