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Abstract
This paper develops a unified analysis of the impacts of production delays on aggregate price fluctuations in a continuous-time cobweb-type model. We find that the time inconsistency between demand and supply due to production delays inherently generates an overshooting effect in prices. Large production delays give rise to price fluctuations, even with a low intensity of choice. We also provide results consistent with the rational route to randomness of Brock and Hommes (1997) in a continuous-time infinite-dimensional economy.
Original language | English |
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Pages (from-to) | 341–362 |
Number of pages | 22 |
Journal | Journal of Economic Behavior and Organization |
Volume | 194 |
DOIs | |
Publication status | Published - Feb 2022 |
Keywords
- Cobweb model
- Heterogeneity
- Adaptiveness
- Production delay
- Stability
- Chaos
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Dive into the research topics of 'Production delays and price dynamics'. Together they form a unique fingerprint.Projects
- 1 Finished
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Slow Diffusion of Information in Asset Pricing and Risk Management
1/01/18 → 31/12/20
Project: Research