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(In)determinacy and Time-to-Build

Author

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  • Mauro BAMBI
  • Omar LICANDRO

Abstract

This paper generalizes Benhabib and Farmer [4], by allowing for a strictly positive time-to-build of capital. The introduction of a time-to-build delay yields a system of mixed functional di¤erential equations. We show that the system has a unique steady state. More important, we prove that the dimension of the unstable manifold is at least one, which implies that a small time-to-build delay rules out local indeterminacy.

Suggested Citation

  • Mauro BAMBI & Omar LICANDRO, 2004. "(In)determinacy and Time-to-Build," Economics Working Papers ECO2004/17, European University Institute.
  • Handle: RePEc:eui:euiwps:eco2004/17
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    Cited by:

    1. Bambi, Mauro & Gozzi, Fausto & Licandro, Omar, 2014. "Endogenous growth and wave-like business fluctuations," Journal of Economic Theory, Elsevier, vol. 154(C), pages 68-111.
    2. Luis A. Puch & Omar Licandro, 2006. "Is Discrete Time a Good Representation of Continuous Time?," Working Papers 2006-20, FEDEA.
    3. d’Albis, Hippolyte & Augeraud-Veron, Emmanuelle & Venditti, Alain, 2012. "Business cycle fluctuations and learning-by-doing externalities in a one-sector model," Journal of Mathematical Economics, Elsevier, vol. 48(5), pages 295-308.
    4. Chryssi Giannitsarou & Alexia Anagnostopoulos, 2005. "Modeling Time and Macroeconomic Dynamics," Money Macro and Finance (MMF) Research Group Conference 2005 60, Money Macro and Finance Research Group.
    5. Mauro Bambi, 2006. "Endogenous Growth and Time-to-Build: the AK Case," Economics Working Papers ECO2006/17, European University Institute.

    More about this item

    Keywords

    Indeterminacy; Time-to-Build; Mixed Functional Di¤erential Equations;

    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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