Local and global indeterminacy in two-sector models of endogenous growth

Paulo B. Brito () and Alain Venditti ()

Journal of Mathematical Economics, 2010, vol. 46, issue 5, pages 893-911

Abstract: We consider a two-sector endogenous growth model where the productions of the final good and human capital require economy-wide external effects. Assuming constant returns to scale at the private and social levels, we show that local and global indeterminacy of equilibrium paths are compatible with any values for the elasticity of intertemporal substitution in consumption and any sign for the capital intensity difference across the two sectors. We also show that for any value of the elasticity of intertemporal substitution in consumption, poverty traps may occur when the final good sector is capital intensive in human capital.

Keywords: Two-sector; model; Endogenous; growth; Economy-wide; externalities; Local; and; global; indeterminacy; Povert; traps (search for similar items in EconPapers)
Date: 2010
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Working Paper: Local and global indeterminacy in two-sector models of endogenous growth (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:eee:mateco:v:46:y:2010:i:5:p:893-911

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