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Chaos and capacity utilization under increasing returns to scale

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  • Stockman, David R.

Abstract

It has been shown that adding variable capacity utilization of capital to a one-sector model with a mild production externality can produce local indeterminacy. In this paper, I provide a global analysis of this model and provide sufficient conditions for the existence of Euler equation branching. I show that this branching allows for regime switching equilibria implying [omega]-chaos and positive topological entropy - two notions of chaotic behavior.

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  • Stockman, David R., 2011. "Chaos and capacity utilization under increasing returns to scale," Journal of Economic Behavior & Organization, Elsevier, vol. 77(2), pages 147-162, February.
    • Handle: RePEc:eee:jeborg:v:77:y:2011:i:2:p:147-162
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    References listed on IDEAS

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    6. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Chapters, in: NBER Macroeconomics Annual 1995, Volume 10, pages 67-124, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Volná, Barbora, 2015. "Existence of chaos in the plane R2 and its application in macroeconomics," Applied Mathematics and Computation, Elsevier, vol. 258(C), pages 237-266.

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