Capital depreciation, indeterminacy and cycles in two-sector economies
نویسندگان
چکیده
We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects and partial depreciation of capital. We show that local indeterminacy of steady states and cycles can easily arise with constant social returns to scale, and very small market imperfections. However these properties of equilibrium paths become less likely in the case of partial depreciation than that of full depreciation.
منابع مشابه
Capital depreciation , factor substitutability and indeterminacy ∗
We consider a discrete-time two-sector CES economy with sector specific external effects and partial depreciation of capital. We show that the occurrence of local indeterminacy of equilibria depends on an interplay between factor substitutability and capital depreciation. When the elasticity of substitution is less than one, local indeterminacy may occur with low depreciation of capital. When t...
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Article history: Accepted 17 January 2014 Available online 15 February 2014 JEL classification: C62 E21 E22
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