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Indeterminacy and Market Instability

Author

Listed:
  • Nicholas C.S. Sim

    (Department of Economics, Boston College, USA)

  • Kong-Weng Ho

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore)

Abstract

This note shows that indeterminacy arising from an economy exhibiting production with social constant returns to scale may be related to the instability of the consumption goods market equilibrium. Furthermore, trade does not contribute to indeterminacy; indeterminacy arises becasue each country’s equilibrium path is already indeterminate before trade.

Suggested Citation

  • Nicholas C.S. Sim & Kong-Weng Ho, 2007. "Indeterminacy and Market Instability," Economic Growth Centre Working Paper Series 0705, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:0705
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    Keywords

    Indeterminacy; Market Instability;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F00 - International Economics - - General - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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