Equilibrium Dynamics in Discrete-Time Endogenous Growth Models with Social Constant Returns

Kazuo Mino, Kazuo Nishimura, Koji Shimomura and Ping Wang

No 05-34, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: The existing literature establishes possibilities of local determinacy and dynamic indeterminacy in continuous-time two-sector models of endogenous growth with social constant returns. The necessary and sufficient condition for local determinacy is that the factor intensity rankings of the two sectors are consistent in the private/physical and social/value sense. The necessary and sufficient condition for dynamic indeterminacy is that the final (consumable) good sector is human (pure) capital intensive in the private sense but physical (consumable) capital intensive in the social sense. This paper re-examines the dynamic properties in a discrete-time endogenous growth framework and finds that conventional propositions obtained in continuous time need not be valid. It is shown that the established necessary and sufficient conditions on factor intensity rankings for local determinacy and dynamic indeterminacy are neither sufficient nor necessary, as the magnitudes of time preference and capital depreciation rates both play essential roles.

Keywords: Sectoral Externalities; Endogenous Growth; Dynamic Determinacy/Indeterminacy. (search for similar items in EconPapers)
JEL-codes: E32 J24 O40 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Equilibrium dynamics in discrete-time endogenous growth models with social constant returns (2008)
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