Endogenous business cycles in overlapping generations models with time inconsistency
研究了在代际交叠模型中引入准双曲贴现偏好和延长经济寿命如何导致内生经济周期，发现时间不一致行为通过降低跨期替代弹性增强了商品互补性，从而更容易出现多重均衡和信念驱动的波动。
This paper investigates the implications of incorporating quasi-hyperbolic discounting preferences and extending the economic lifespan for the emergence of endogenous business cycles. Using a three-period overlapping generations model, we examine how quasi-hyperbolic discounting influences the dynamics of deterministic cycles and local sunspot equilibria. The presence of a middle-aged generation plays a key role in generating an elasticity of intertemporal substitution that is lower than the inverse of risk aversion, interacting with consumers’ time-inconsistent behavior. A lower EIS strengthens gross complementarity between dated goods and thereby contributes to the existence of multiple equilibria and self-fulfilling, belief-driven fluctuations. We show that our three-period model with time-inconsistent preferences makes two-period cycles and local indeterminacy more plausible than in a standard two-period framework with exponential discounting, as it expands the set of parameter values under which such endogenous fluctuations can arise.