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Factor Intensity Reversal and Ergodic Chaos

  • Goenka, Aditya

    ()

    (Department of Economics, Aarhus School of Business)

  • Poulsen, Odile

    ()

    (Department of Economics, Aarhus School of Business)

This paper studies a two-sector endogenous growth model with labour augmenting externalities or Harrod-Neutral technical change. The technologies are general and the preferences are of the CES class. If con- sumers are su±ciently patient, ergodic chaos and geometric sensitivity to initial conditions can emerge if either (1) there is factor intensity reversal; or (2) if the consumption goods producing sector is always capital intensive. The upper bound on the discount rate is determined only by the transver- sality condition. If utility is linear, there can be chaos only if there is factor intensity reversal

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File URL: http://www.hha.dk/nat/wper/04-13_agodp.pdf
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 04-13.

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Length: 29 pages
Date of creation: 10 Dec 2004
Date of revision:
Handle: RePEc:hhs:aareco:2004_013
Contact details of provider: Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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