Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization

Jess Benhabib, Kazuo Nishimura and Tadashi Shigoka

International Journal of Economic Theory, 2008, vol. 4, issue 2, 337-355

Abstract: In the present paper, we construct a continuous time model of economic growth with positive externalities and with variable capacity utilization, and study the global equilibrium paths in this model. If there is a homoclinic orbit or a periodic solution in this model, equilibrium is globally indeterminate. We show that positive externalities can yield multiple steady states, a one‐parameter family of homoclinic orbits, and a two‐parameter family of periodic solutions. It is also shown that there exists a sunspot equilibrium in this model.

Date: 2008
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https://doi.org/10.1111/j.1742-7363.2008.00083.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:4:y:2008:i:2:p:337-355

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