Equilibrium Dynamics in a Two-Sector Model with Taxes
AbstractIn this paper we are concerned with the equilibrium dynamics of a two-sector model of endogenous growth with distortionary taxes. We show that for certain parameters values and tax schemes every equilibrium orbit--except the steady state solution--is non-interior; i.e., there are times in which one of the sectors is inactive. This analysis confirms that in multisector models the set of easily checkable, universal conditions that can guarantee the interiority of equilibrium solutions is rather limited.
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Bibliographic InfoPaper provided by Department of Economics, W. P. Carey School of Business, Arizona State University in its series Working Papers with number 2133332.
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Other versions of this item:
- Ortigueira, Salvador & Santos, Manuel S., 2002. "Equilibrium Dynamics in a Two-Sector Model with Taxes," Journal of Economic Theory, Elsevier, vol. 105(1), pages 99-119, July.
- Ortigueira, Salvador & Santos, Manuel S., 2001. "Equilibrium Dynamics in a Two-Sector Model with Taxes," Working Papers 01-17, Cornell University, Center for Analytic Economics.
- D90 - Microeconomics - - Intertemporal Choice - - - General
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
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