Indeterminacy and cycles in two-sector discrete-time model

We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects. We show that indeterminacy of steady states and cycles can easily arise with constant or decreasing social returns to scale, and very small market imperfections. This is in sharp contrast with most of the contributions in the literature in which increasing social returns are required to generate indeterminacy.

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Year of publication:	2002-02-26
Authors:	Nishimura, Kazuo ; Benhabib, Jess ; Venditti, Alain
Published in:	Economic Theory. - Springer. - Vol. 20.2002, 2, p. 217-235
Publisher:	Springer
Subject:	Sector specific externalities \| Constant and decreasing social returns \| Indeterminacy \| Cycles

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Extent:	application/pdf
Type of publication:	Article
Notes:	Received: July 31, 2000; revised version: June 5, 2001
Classification:	C62 - Existence and Stability Conditions of Equilibrium ; E32 - Business Fluctuations; Cycles ; O41 - One, Two, and Multisector Growth Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005370799