Equilibrium Dynamics in Discrete-Time Endogenous Growth Models with Social Constant Returns

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Equilibrium Dynamics in Discrete-Time Endogenous Growth Models with Social Constant Returns

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Kazuo Mino () (Faculty of Economics, Osaka University)
Kazuo Nishimura (Kyoto University)
Koji Shimomura (Kobe University)
Ping Wang (Washington University in St. Louis and NBER)

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Abstract

The existing literature establishes possibilities of local determinacy and dynamic indeterminacy in continuous-time two-sector models of endogenous growth with social constant returns. The necessary and sufficient condition for local determinacy is that the factor intensity rankings of the two sectors are consistent in the private/physical and social/value sense. The necessary and sufficient condition for dynamic indeterminacy is that the final (consumable) good sector is human (pure) capital intensive in the private sense but physical (consumable) capital intensive in the social sense. This paper re-examines the dynamic properties in a discrete-time endogenous growth framework and finds that conventional propositions obtained in continuous time need not be valid. It is shown that the established necessary and sufficient conditions on factor intensity rankings for local determinacy and dynamic indeterminacy are neither sufficient nor necessary, as the magnitudes of time preference and capital depreciation rates both play essential roles.

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Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 05-34.

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Length: 30 pages
Date of creation: Dec 2005
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Handle: RePEc:osk:wpaper:0534

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Article
- Kazuo Mino & Kazuo Nishimura & Koji Shimomura & Ping Wang, 2008. "Equilibrium dynamics in discrete-time endogenous growth models with social constant returns," Economic Theory, Springer, vol. 34(1), pages 1-23, January. [Downloadable!] (restricted)

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-12-20 (All new papers)
NEP-MAC-2005-12-20 (Macroeconomics)

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Junko Doi & Kazumichi Iwasa & Koji Shimomura, 2006. "Indeterminacy in the free-trade world," Discussion Paper Series 187, Research Institute for Economics & Business Administration, Kobe University. [Downloadable!]

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