Equilibrium Dynamics in a Two-Sector Model with Taxes

Salvador Ortigueira and Manuel S. Santos
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Manuel S. Santos: Arizona State U, Tempe

Working Papers from Cornell University, Center for Analytic Economics

Abstract: In this paper we are concerned with the equilibrium dynamics of a two-sector model of endogenous growth with distortionary taxes. We show that for certain parameters values and tax schemes every equilibrium orbit--except the steady state solution--is non-interior; i.e., there are times in which one of the sectors is inactive. This analysis confirms that in multisector models the set of easily checkable, universal conditions that can guarantee the interiority of equilibrium solutions is rather limited.

JEL-codes: D90 E22 (search for similar items in EconPapers)
Date: 2001-04
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Citations: View citations in EconPapers (1)

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https://cae.economics.cornell.edu/taxes.pdf

Related works:
Journal Article: Equilibrium Dynamics in a Two-Sector Model with Taxes (2002)
Working Paper: Equilibrium Dynamics in a Two-Sector Model with Taxes
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:corcae:01-17

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