Endogenous Cycles in Competitive Models: An Overview

Pietro Reichlin
Dipartimento di Metodi Quantitativi e Teoria Economica
Università di Chieti

Pages 175-185

Abstract

It is a common assertion that, in a world with perfect markets and rational expectations, endogenous cycles could only arise under very unrealistic assumptions. This paper offers a short discussion on this claim and a review of the relevant contributions to the literature on deterministic fluctuations in competitive models. It is argued that these types of fluctuations are more easily obtained when agents are assumed to be heterogeneous and when the production side of the economy is considered. The paper also discusses the existence of endogenous cycles in models with financial market imperfections and nonconvex technologies.

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