Stability Properties in a Growth Model
The inclusion of a labour/leisure choice in endogenous growth models has interesting and somewhat counter-intuitive effects. In existing one sector models, a condition for indeterminacy is that labour demand is upward-sloping, which is difficult to reconcile with the evidence. In this paper we give conditions for indeterminacy in a one sector model with decreasing returns to labour. We show that this requires that consumption and leisure are both highly intertemporally substitutable while the factors of production are highly complementary.
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|Date of creation:||1997|
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- Benhabib, Jess & Farmer, Roger E.A., 1991.
"Indeterminacy and Increasing Returns,"
91-59, C.V. Starr Center for Applied Economics, New York University.
- Benhabib, Jess & Gali, Jordi, 1995.
"On growth and indeterminacy: some theory and evidence,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 43(1), pages 163-211, December.
- Benhabib, Jess & Gali, Jordi, 1995. "On Growth and Indeterminacy: Some Theory and Evidence," Working Papers 95-08, C.V. Starr Center for Applied Economics, New York University.
- Benhabib, Jess & Farmer, Roger E.A., 1999. "Indeterminacy and sunspots in macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 6, pages 387-448 Elsevier.
- Roger E.A. Farmer, 1994.
"The Econometrics of Indeterminacy: An Applied Study,"
UCLA Economics Working Papers
720, UCLA Department of Economics.
- Farmer, Roger E. A. & Jang-Ting, Guo, 1995. "The econometrics of indeterminacy: an applied study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 225-271, December.
- 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.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Danyang Xie, 2002.
"Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria,"
GE, Growth, Math methods
- Xie Danyang, 1994. "Divergence in Economic Performance: Transitional Dynamics with Multiple Equilibria," Journal of Economic Theory, Elsevier, vol. 63(1), pages 97-112, June.
- Benhabib Jess & Rustichini Aldo, 1994. "Introduction to the Symposium on Growth, Fluctuations, and Sunspots: Confronting the Data," Journal of Economic Theory, Elsevier, vol. 63(1), pages 1-18, June.
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