Indeterminacy Revisited: Variable Capital Utilization and Returns to Scale

This paper presents a one-sector optimal growth model with variable capacity services and production externalities. It uses a new formulation of the endogenous capital utilization rate in which utilization costs appear in the form of variable maintenance expenses. I find that indeterminacy arises at approximate constant returns to scale. This result challenges the viewpoint that indeterminacy is empirically implausible.

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Year of publication:	2005-08
Authors:	Weder, Mark
Institutions:	School of Economics, University of Adelaide
Subject:	indeterminacy \| dynamic general equilibrium \| variable capital utilization

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Extent:	application/pdf
Series:	School of Economics Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 2005-12 16 pages
Classification:	E32 - Business Fluctuations; Cycles
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008520852