In this paper we are concerned with the equilibrium dynamics of a two-sector model of endogenous growth with distortionary taxes. We show that for certain parameters values and tax schemes every equilibrium orbit--except the steady state solution--is non-interior; i.e., there are times in which...

This paper presents some examples of regular dynamic economies with externalities and taxes that either lack existence of a Markov equilibrium or such equilibrium is not continuous. These examples pose further challenges for the analysis and computation of these economies