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Factors substitutability, heterogeneity and endogenous fluctuations in a finance constrained economy

Author

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  • Jean-Paul Barinci

    (EUREQua - UniversitÊ de Paris 1, 106-112, Bd de l'HÆpital, 75647 Paris Cedex 13, FRANCE)

Abstract

This paper examines the local properties of perfect foresight equilibrium of a finance constrained economy featuring two classes of infinitely-lived agents with heterogeneous general preferences. It is primarily concerned with the conceivability of endogenous fluctuations for large plausible capital-labor elasticities of substitution. It is notably shown that heterogeneity in preferences allows Hopf cycles to be entirely consistent with a wide range of elasticities of substitution including the unitary one (Cobb-Douglas specifications).

Suggested Citation

  • Jean-Paul Barinci, 2001. "Factors substitutability, heterogeneity and endogenous fluctuations in a finance constrained economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 17(1), pages 181-195.
    • Handle: RePEc:spr:joecth:v:17:y:2001:i:1:p:181-195
    Note: Received: April 23, 1999; revised version: January 24, 2000
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    More about this item

    Keywords

    Heterogeneity; Factors substitutability; Local bifurcations and endogenous fluctuations.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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