Indeterminacy and cycles in two-sector discrete-time model

Jess Benhabib; Kazuo Nishimura; Alain Venditti

doi:10.1007/s001990100217

Indeterminacy and cycles in two-sector discrete-time model

Jess Benhabib, Kazuo Nishimura, Alain Venditti

Research output: Contribution to journal › Article › peer-review

Abstract

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.

Original language	English (US)
Pages (from-to)	217-235
Number of pages	19
Journal	Economic Theory
Volume	20
Issue number	2
DOIs	https://doi.org/10.1007/s001990100217
State	Published - Sep 2002

Keywords

Constant and decreasing social returns
Cycles
Indeterminacy
Sector specific externalities

ASJC Scopus subject areas

Economics and Econometrics

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10.1007/s001990100217

Cite this

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AB - 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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Indeterminacy and cycles in two-sector discrete-time model

Abstract

Keywords

ASJC Scopus subject areas

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