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Indeterminacy in aggregate models with small externalities: an interplay between preferences and technology

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Author Info

  • Kazuo Nishimura

    ()
    (Kyoto University - Kyoto University)

  • Carine Nourry

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

  • Alain Venditti

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

Abstract

In this paper we consider a Ramsey-type aggregate model with general preferences and technology, endogenous labor and factor-specificproductive external effects arising from average capital and labor. First, we show that indeterminacy cannot arise when there are onlycapital externalities but that it does when there are only labor external effects. Second, we prove that only the additively-separable and linear homogeneous specifications for the utility function allow to get local indeterminacy under small externalities and plausible restrictions on the main parameters. Third, we show that the existence of sunspot fluctuations is intimately related to the occurrence of periodic cycles through a Hopf bifurcation.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00281428.

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Date of creation: 22 May 2008
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Handle: RePEc:hal:wpaper:halshs-00281428

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00281428/en/
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Related research

Keywords: Indeterminacy; endogenous cycles; infinite-horizon model; endogenous labor supply; capital and labor externalities;

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Cited by:
  1. Hippolyte D'Albis & Emmanuelle Augeraud-Véron & Alain Venditti, 2009. "Business cycle fluctuations and learning-by-doing externalities in a one-sector model," Working Papers halshs-00432267, HAL.
  2. Nicolas Abad & Thomas Seegmuller & Alain Venditti, 2013. "Aggregate Instability under Labor Income Taxation and Balanced-Budget Rules: Preferences Matter," Working Papers halshs-00793213, HAL.
  3. Frédéric Dufourt & Kazuo Nishimura & Alain Venditti, 2013. "Indeterminacy and Sunspot Fluctuations in Two-Sector RBC models: Theory and Calibration," Working Papers halshs-00796703, HAL.
  4. Carboni, Oliviero A. & Russu, Paolo, 2013. "Linear production function, externalities and indeterminacy in a capital-resource growth model," Journal of Mathematical Economics, Elsevier, vol. 49(5), pages 422-428.
  5. Jean-Philippe Garnier, 2013. "Keeping-up with the Joneses, a new source of fluctuations in the two-sector continuous-time models," Working Papers hal-00991664, HAL.

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