Global Analysis and Indeterminacy in a Two-sector Growth Model with Human Capital
The purpose of the present paper is to highlight some features of global dynamics of the two-sector growth model with accumulation of human and physical capital analyzed by Brito and Venditti, which is a specification of the model proposed by Mulligan and Sala-i-Martin. In particular, our analysis focuses on the context in which Brito-Venditti system admits two balanced growth paths each of them corresponding, after a change of variables, to an equilibrium point of a 3-dimensional system, and proves the possible existence of points P such that in any neighborhood of P lying on the plane corresponding to a fixed value of the state variable there exist points Q whose positive trajectories tend to either equilibrium point. This implies that equilibrium selection in Brito Venditti system may depend on expectations of economic agents rather than on the history of the economy. That is, economies with identical technologies and preferences, starting from the same initial values of the state variables (history), may follow rather different equilibrium trajectories according to the economic agents' choices of the initial values of the jumping variables (expectations). Moreover we prove that the basins of attraction (two or three dimensional) of locally indeterminate equilibrium points may be very large, as they may extend up to the boundary of the system phase space.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: Via delle Pandette 9 50127 - Firenze - Italy|
Phone: +39 055 2759582
Web page: http://www.disei.unifi.it/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benhabib, J. & Farmer, R.E.A, 1991.
"Indeterminacy and Increasing Returns,"
165, Cambridge - Risk, Information & Quantity Signals.
- Benhabib, Jess & Farmer, Roger E.A., 1991. "Indeterminacy and Increasing Returns," Working Papers 91-59, C.V. Starr Center for Applied Economics, New York University.
- Jess Benhabib & Roger E.A. Farmer, 1992. "Indeterminacy and Increasing Returns," UCLA Economics Working Papers 646, UCLA Department of Economics.
- Paulo Brito & Alain Venditti, 2009.
"Local and global indeterminacy in two-sector models of endogenous growth,"
- Brito, Paulo & Venditti, Alain, 2010. "Local and global indeterminacy in two-sector models of endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 893-911, September.
- Franz Wirl, 2011. "Conditions for indeterminacy and thresholds in neoclassical growth models," Journal of Economics, Springer, vol. 102(3), pages 193-215, April.
- Tarek Coury & Yi Wen, 2009. "Global indeterminacy in locally determinate real business cycle models," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 49-60.
- Paolo Mattana & Kazuo Nishimura & Tadashi Shigoka, 2009. "Homoclinic bifurcation and global indeterminacy of equilibrium in a two-sector endogenous growth model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 5(1), pages 25-47.
- 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.
- Slobodyan, Sergey, 2007.
"Indeterminacy and stability in a modified Romer model,"
Journal of Macroeconomics,
Elsevier, vol. 29(1), pages 169-177, March.
- Sergey Slobodyan, 2002. "Indeterminacy and Stability in a Modified Romer Model," CERGE-EI Working Papers wp205, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
- 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.
- Antoci, Angelo & Galeotti, Marcello & Russu, Paolo, 2011. "Poverty trap and global indeterminacy in a growth model with open-access natural resources," Journal of Economic Theory, Elsevier, vol. 146(2), pages 569-591, March.
When requesting a correction, please mention this item's handle: RePEc:frz:wpaper:wp2012_14.rdf. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Giorgio Ricchiuti)
If references are entirely missing, you can add them using this form.