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Indeterminacy and Sunspots with Constant Returns

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  • Benhabib, Jess
  • Nishimura, Kazuo

Abstract

Recently there has been a renewed interest in the possibility of indeterminacy and sunspots, or alternatively put, in the existence of a continuum of equilibria that arises in dynamic economies with some market imperfections. Much of the research in this area has been concerned with the empirical plausibility of indeterminacy in markets with external effects or with monopolistic competition and which exhibit some degree of increasing returns. While the early results on indeterminacy relied on relatively large increasing returns and high markups, more recently Benhabib and Farmer (1996a) showed that indeterminacy can also occur in two-sector models with small sector-specific external effects and very mild increasing returns.
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Suggested Citation

  • Benhabib, Jess & Nishimura, Kazuo, 1998. "Indeterminacy and Sunspots with Constant Returns," Journal of Economic Theory, Elsevier, vol. 81(1), pages 58-96, July.
    • Handle: RePEc:eee:jetheo:v:81:y:1998:i:1:p:58-96
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    References listed on IDEAS

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    1. Gali Jordi, 1994. "Monopolistic Competition, Business Cycles, and the Composition of Aggregate Demand," Journal of Economic Theory, Elsevier, vol. 63(1), pages 73-96, June.
    2. Chatterjee, Satyajit & Cooper, Russell, 1989. "Multiplicity of Equilibria and Fluctuations in Dynamic Imperfectly Competitive Economies," American Economic Review, American Economic Association, vol. 79(2), pages 353-357, May.
    3. Benhabib Jess & Perli Roberto, 1994. "Uniqueness and Indeterminacy: On the Dynamics of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 63(1), pages 113-142, June.
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    5. repec:adr:anecst:y:1995:i:37-38:p:10 is not listed on IDEAS
    6. Jess Benhabib & Kazuo Nishimura, 2012. "The Hopf Bifurcation and Existence and Stability of Closed Orbits in Multisector Models of Optimal Economic Growth," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 51-73, Springer.
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    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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