Barnett, Richard C.; Bhattacharya, Joydeep - School of Economics and Management, University of Aarhus - 2007
cycles.
Let
o (
e ) denote the growth rate at odd (even) dates, respectively. In a 2-period
cycle, we then have
e
o = (1 … + )
o (
)2 (16)
e
o = (1 + )
e (
)2
A trivial solution to (16), of course, is
e =
o =
, the 1-cycle or the … steady state.
However, we seek solutions to (16) with
o 6=
e.
Proposition 3 Any 2 period cycle must satisfy = 1:
We …