Indeterminacy and cycles in two-sector discrete-time model

Kazuo Nishimura, Jess Benhabib and Alain Venditti

Economic Theory, 2002, vol. 20, issue 2, 217-235

Abstract: We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects. We show that indeterminacy of steady states and cycles can easily arise with constant or decreasing social returns to scale, and very small market imperfections. This is in sharp contrast with most of the contributions in the literature in which increasing social returns are required to generate indeterminacy.

Keywords: Sector specific externalities; Constant and decreasing social returns; Indeterminacy; Cycles. (search for similar items in EconPapers)
JEL-codes: C62 E32 O41 (search for similar items in EconPapers)
Date: 2002-02-26
Note: Received: July 31, 2000; revised version: June 5, 2001
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Citations: View citations in EconPapers (15)

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Working Paper: Indeterminacy and Cycles in Two-Sector Discrete-Time Models (1999)
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