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On the indeterminacy of equilibrium in an endogenous growth model with non-separable preferences

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  • Barañano, Ilaski
  • San Martín, Marta

Abstract

This paper studies equilibrium indeterminacy in an extended version of the two-sector endogenous growth model by Mino (1999) by allowing alternative specifications for leisure. When utility depends on pure leisure, indeterminacy may only emerge if consumption and leisure are Edgeworth complements. We obtain the necessary and sufficient conditions for indeterminacy from the arbitrage condition on the two assets of the economy: consumption and human capital. When qualified leisure is considered, indeterminacy does not arise.

Suggested Citation

  • Barañano, Ilaski & San Martín, Marta, 2020. "On the indeterminacy of equilibrium in an endogenous growth model with non-separable preferences," Mathematical Social Sciences, Elsevier, vol. 108(C), pages 81-89.
    • Handle: RePEc:eee:matsoc:v:108:y:2020:i:c:p:81-89
    DOI: 10.1016/j.mathsocsci.2020.10.001
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