Indeterminacy Revisited: Variable Capital Utilization and Returns to Scale
AbstractThis paper presents a one-sector optimal growth model with variable capacity services and production externalities. It uses a new formulation of the endogenous capital utilization rate in which utilization costs appear in the form of variable maintenance expenses. I find that indeterminacy arises at approximate constant returns to scale. This result challenges the viewpoint that indeterminacy is empirically implausible.
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Bibliographic InfoPaper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2005-12.
Length: 16 pages
Date of creation: Aug 2005
Date of revision:
indeterminacy; dynamic general equilibrium; variable capital utilization;
Other versions of this item:
- Mark Weder, 2005. "Indeterminacy Revisited: Variable Capital Utilization and Returns to Scale," Finnish Economic Papers, Finnish Economic Association, vol. 18(2), pages 49-56, Autumn.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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