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Indeterminacy And The Role Of Factor Substitutability

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  • NISHIMURA, KAZUO
  • VENDITTI, ALAIN

Abstract

We discuss the role of the elasticity of substitution in the local determinacy properties of a steady state or a stationary balanced growth path in a general multisector economy with CES technologies. Our main results are the following: We give some sufficient conditions for the occurrence of local indeterminacy in exogenous and endogenous growth models. We show that local indeterminacy takes place even without a capital intensity reversal from the private to the social level if the productive factors are weakly substitutable. Moreover, we show that the conditions for local indeterminacy in exogenous growth models and in endogenous growth models may be qualitatively different.

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Bibliographic Info

Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 8 (2004)
Issue (Month): 04 (September)
Pages: 436-465

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Handle: RePEc:cup:macdyn:v:8:y:2004:i:04:p:436-465_03

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References

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  1. Benhabib, J. & Nishimura, K. & Venditti, A., 1999. "Indeterminacy and Cycles in Two-Sector Discrete-Time Models," G.R.E.Q.A.M. 99a58, Universite Aix-Marseille III.
  2. repec:fth:starer:9613 is not listed on IDEAS
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Citations

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Cited by:
  1. Wong, Tsz-Nga & Yip, Chong K., 2010. "Indeterminacy and the elasticity of substitution in one-sector models," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 623-635, April.
  2. Kazuo Nishimura & Alain Venditti, 2010. "Indeterminacy and expectation-driven uctuations with non-separable preferences," KIER Working Papers 702, Kyoto University, Institute of Economic Research.
  3. Litina, Anastasia & Palivos, Theodore, 2010. "The Behavior Of The Saving Rate In The Neoclassical Optimal Growth Model," Macroeconomic Dynamics, Cambridge University Press, vol. 14(04), pages 482-500, September.
  4. Gomez Suarez, Manuel A., 2008. "Utility and production externalities, equilibrium efficiency and leisure specification," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1496-1519, December.
  5. Nishimura, Kazuo & Venditti, Alain, 2007. "Indeterminacy in discrete-time infinite-horizon models with non-linear utility and endogenous labor," Journal of Mathematical Economics, Elsevier, vol. 43(3-4), pages 446-476, April.
  6. Been-Lon Chen & Angus Chu, 2010. "On R&D spillovers, multiple equilibria and indeterminacy," Journal of Economics, Springer, vol. 100(3), pages 247-263, July.
  7. Harutaka Takahashi, 2008. "Optimal balanced growth in a general multi-sector endogenous growth model with constant returns," Economic Theory, Springer, vol. 37(1), pages 31-49, October.
  8. Paulo Brito & Alain Venditti, 2009. "Local and global indeterminacy in two-sector models of endogenous growth," Working Papers halshs-00408018, HAL.
  9. Jang-Ting Guo & Kevin J. Lansing, 2008. "Capital-Labor Substitution, Equilibrium Indeterminacy, and the Cyclical Behavior of Labor Income," Working Papers 200804, University of California at Riverside, Department of Economics, revised Apr 2008.
  10. Gómez, Manuel A., 2008. "Dynamics Of The Saving Rate In The Neoclassical Growth Model With Ces Production," Macroeconomic Dynamics, Cambridge University Press, vol. 12(02), pages 195-210, April.
  11. Guo, Jang-Ting & Lansing, Kevin J., 2009. "Capital-labor substitution and equilibrium indeterminacy," Journal of Economic Dynamics and Control, Elsevier, vol. 33(12), pages 1991-2000, December.

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