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HOPF CYCLES IN ONE-SECTOR OPTIMAL GROWTH MODELS WITH TIME DELAY

Published online by Cambridge University Press:  13 September 2016

Hitay Özbay,
Hüseyin Çağrı Sağlam and
Mustafa Kerem Yüksel
Hitay Özbay
Affiliation:
Bilkent University
Hüseyin Çağrı Sağlam
Affiliation:
Bilkent University
Mustafa Kerem Yüksel*
Affiliation:
University of Turkish Aeronautical Association and Bilkent University
*
Address correspondence to: Mustafa Kerem Yüksel, Department of International Trade and Finance, University of Turkish Aeronautical Association, and Department of Economics, Bilkent University, Ankara, Turkey; e-mail: mkerem@bilkent.edu.tr.
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Abstract

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This paper analyzes the existence of Hopf bifurcation and establishes the conditions under which the equilibrium path converges toward periodic solutions in a one-sector optimal growth model with delay. We establish the limits and the possibilities of nonlinear dynamics (i.e., cycles) vis-à-vis delays. In particular, we formulate a new method to further comprehend the root distribution of the characteristic equation of a standard optimal growth model with delayed investment structure. We show that nonmonotonic dynamics (limit cycles, persistent oscillations) occurs when the delayed investment causes permanent adjustment failures among the economic variables in the economy.

Keywords

Optimal Growth ModelsTime DelayHopf Bifurcation

Information

Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 8 , December 2017, pp. 1887 - 1901
Copyright
Copyright © Cambridge University Press 2016 

Footnotes

For many helpful discussions and comments, we thank Stefano Bosi, Paolo Brito, and Omar Licandro, as well as seminar participants at COIA in Ankara, Turkey. The usual disclaimer applies.

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