Journal of Economics

, Volume 56, Issue 2, pp 185–196 | Cite as

A note on the stability of endogenous cycles in Diamond's model of search and barter

  • Thomas Lux
Miscellanea

Abstract

In this note stability conditions for the endogenous rational expectations business cycles detected by Diamond and Fudenberg (1989) are derived. It is shown that for the trading externality underlying their example, bifurcating cycles are always stable, i.e., there always exists a continuum of rational expectations equilibrium paths converging to the cycle.

References

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Copyright information

© Springer-Verlag 1992

Authors and Affiliations

  • Thomas Lux
    • 1
  1. 1.Faculty of EconomicsUniversity of BambergBambergGermany

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