English, Article edition: On the stability of endogenous growth models: An evaluation of the agents' response to output fluctuations Orlando Gomes

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Bookmark: http://trove.nla.gov.au/version/28749
Physical Description
  • article
Language
  • English

Edition details

Title
  • On the stability of endogenous growth models: An evaluation of the agents' response to output fluctuations
Author
  • Orlando Gomes
Physical Description
  • article
Notes
  • Purpose – The purpose of this paper is to present three modified versions of the simple AK endogenous growth model. Design/​methodology/​approach – Such frameworks stress the role of consumers' sentiment, the impact of fiscal policy and the effect of non-optimal investment decisions made by firms. In all the cases, today's decisions take into consideration the economic performance of the previous period; in the first case, households react pro-cyclically to the output path; in the second case, a counter-cyclical fiscal policy is considered; and in the third case, firms adopt a pro-cyclical behavior concerning investment choices. Findings – The author studies the stability properties of the three models and concludes that, on each one of them, a saddle-path stable equilibrium exists. Originality/​value – The paper accentuates the relevance of the reaction of the economic agents relatively to the business cycle. By assuming that the behavior of consumers, government and firms is a behavior of reaction to economic fluctuations, we find interesting and relevant results in what concerns the conventional intertemporal optimization growth model.
  • Consumer behaviour, Fiscal policy, Investments
  • RePEc:eme:jespps:v:36:y:2009:i:1:p:17-35
Language
  • English
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