The impact of heterogeneity on indeterminacy

Christian Ghiglino and Marielle Olszak-Duquenne

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: The aim of the paper is to explore the link between agent's heterogeneity and indeterminacy in a general equilibrium economy. The framework is provided by the two-sector growth model with technological externalities of Boldrin and Rustichini (1994) in which heterogeneous agents are introduced. We first show that the occurrence of indeterminacy depends on the distribution in labor endowments and in shares on initial capital among the agents as well as on preferences and technology. We find that the sign of the effect of heterogeneity on indeterminacy is not pinned down by the standard properties of preferences, a fact that might be surprising in view of some recent results (as in Herrendorf et al. (2000)). However, when risk aversion is a concave or a slightly convex function, the heterogeneity is a factor that opposes the external effects in generating indeterminacy.

Keywords: Endogenous growth; Heterogeneity; Indeterminacy; Inequalities (search for similar items in EconPapers)
JEL-codes: D30 D50 D90 O41 (search for similar items in EconPapers)
Date: 2002-11
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: ON THE IMPACT OF HETEROGENEITY ON INDETERMINACY (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ube:dpvwib:dp0213

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