Indeterminacy in Discrete-Time Infinite-Horizon Models with Non-linear Utility and Endogenous Labor

Kazuo Nishimura and Alain Venditti

Chapter Chapter 15 in Nonlinear Dynamics in Equilibrium Models, 2012, pp 363-400 from Springer

Abstract: Abstract Over the last decade, a large number of papers have established the fact that locally indeterminate equilibria and sunspots fluctuations may arise in infinite-horizon growth models with external effects in production. These contributions also show that there exist significant differences between one-sector and two-sector models. As initially established by Benhabib and Farmer (1994), in one-sector models local indeterminacy requires some increasing returns based on externalities coming from capital and more importantly labor, a strongly elastic labor supply, and a large enough elasticity of intertemporal substitution in consumption which may however remain within plausible intervals.

Date: 2012
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Journal Article: Indeterminacy in discrete-time infinite-horizon models with non-linear utility and endogenous labor (2007)
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DOI: 10.1007/978-3-642-22397-6_15

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