Abstract

This study generalises a growth model proposed by Zhang (2016) through allowing all the time-dependent variables to be time-dependent. Zhang’s model deals with dynamic interdependence between capital accumulation and environmental change, with portfolio equilibrium among land, gold and physical wealth in a multi-sector general equilibrium framework. The model explains the dynamics of prices, rents and distribution of land, gold, physical wealth and environmental change on the basis of micro-economic foundation. This article generalises the model to explain business cycles due to different exogenous shocks. We simulate the motion of the economy and conduct comparative dynamic analysis to demonstrate business cycles due to periodic oscillations in the propensity to use gold, the propensity to consume housing, the propensity to consume industrial goods, the propensity to consume agricultural goods, the propensity to save, and the tax rate on the consumption of industrial goods. JEL Classification: O41, D41, E32

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.