Indeterminacy and business-cycle fluctuations in a two-sector monetary economy with externalities
We consider a two-sector economy with money-in-the-utility-function and sector-specific externalities. We provide conditions on technologies leading to the existence of local indeterminacy for any value of the interest rate elasticity of money demand, provided the elasticity of intertemporal substitution in consumption is large enough. Moreover, we show that the occurrence of multiple equilibria is intimately linked with the existence of a flip bifurcation and period-two cycles.
|Date of creation:||15 Nov 2009|
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|Note:||View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00432268/en/|
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