Indeterminacy and labor augmenting externalities

Aditya Goenka and Odile Poulsen

Journal of Economics, 2005, vol. 86, issue 1, 143-166

Abstract: We study a two-sector model of economic growth with labor augmenting external effects. Using general specifications of the technologies, we derive necessary and sufficient conditions for local indeterminacy. We show that, when the investment good sector is capital intensive at the private level, the necessary condition for the growth ray to be indeterminate is that the cost of forgoing consumption is not too high. When the consumption good sector is capital intensive, indeterminacy requires that the depreciation of the capital stock is not too low and that utility is not too concave. Copyright Springer-Verlag 2005

Keywords: Indeterminacy; externalities; two-sector growth model; factor intensities; C62; E32; O41 (search for similar items in EconPapers)
Date: 2005
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Journal Article: Indeterminacy and labor augmenting externalities (2005)
Working Paper: Indeterminacy and Labor Augmenting Externalities (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:86:y:2005:i:1:p:143-166

DOI: 10.1007/BF03051803

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