Indeterminacy Revisited: Variable Capital Utilization and Returns to Scale

Mark Weder

Finnish Economic Papers, 2005, vol. 18, issue 2, 49-56

Abstract: 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.

JEL-codes: E32 (search for similar items in EconPapers)
Date: 2005
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Working Paper: Indeterminacy Revisited: Variable Capital Utilization and Returns to Scale (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:fep:journl:v:18:y:2005:i:2:p:49-56

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