The impact of heterogeneity on indeterminacy
The aim of the paper is to explore the link between agent's heterogeneity and indeterminacy in a general equilibrium economy. The framework is provided by the two-sector growth model with technological externalities of Boldrin and Rustichini (1994) in which heterogeneous agents are introduced. We first show that the occurrence of indeterminacy depends on the distribution in labor endowments and in shares on initial capital among the agents as well as on preferences and technology. We find that the sign of the effect of heterogeneity on indeterminacy is not pinned down by the standard properties of preferences, a fact that might be surprising in view of some recent results (as in Herrendorf et al. (2000)). However, when risk aversion is a concave or a slightly convex function, the heterogeneity is a factor that opposes the external effects in generating indeterminacy.
|Date of creation:||Nov 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Schanzeneckstr. 1, PF 8573, CH-3001 Bern|
Phone: 0041 31 631 45 06
Fax: 41 31 631 37 83
Web page: http://www.vwi.unibe.ch/content/publikationen/index_eng.html
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.:
- Kiminori Matsuyama, 1990.
"Increasing Returns, Industrialization and Indeterminacy of Equilibrium,"
878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 617-650.
- Timothy J. Kehoe & David K. Levine & Paul M. Romer, 1990.
"On characterizing equilibria of economies with externalities and taxes as solutions to optimization problems,"
436, Federal Reserve Bank of Minneapolis.
- Kehoe, Timothy J & Levine, David K & Romer, Paul M, 1992. "On Characterizing Equilibria of Economies with Externalities and Taxes as Solutions to Optimization Problems," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(1), pages 43-68, January.
- Timothy J. Kehoe & David K. Levine & Paul M. Romer, 1989.
"Determinacy of equilibria in dynamic models with finitely many consumers,"
118, Federal Reserve Bank of Minneapolis.
- Kehoe, Timothy J. & Levine, David K. & Romer, Paul M., 1990. "Determinacy of equilibria in dynamic models with finitely many consumers," Journal of Economic Theory, Elsevier, vol. 50(1), pages 1-21, February.
- Timothy J. Kehoe & David K. Levine & Paul Romer, 1990. "Determinacy of Equilibrium in Dynamic Models with Finitely Many Consumers," Levine's Working Paper Archive 165, David K. Levine.
- Berthold Herrendorf & Akos Valentinyi & Robert Waldmann, 2000. "Ruling Out Multiplicity and Indeterminacy: The Role of Heterogeneity," Review of Economic Studies, Oxford University Press, vol. 67(2), pages 295-307.
- Christian Ghiglino & Marielle Olszak-Duquenne, 2001. "Inequalities and fluctuations in a dynamic general equilibrium model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 17(1), pages 1-24.
- Michele Boldrin & Aldo Rustichini, 2010.
"Growth and Indeterminacy in Dynamic Models with Externalities,"
Levine's Working Paper Archive
1382, David K. Levine.
- Boldrin, Michele & Rustichini, Aldo, 1994. "Growth and Indeterminacy in Dynamic Models with Externalities," Econometrica, Econometric Society, vol. 62(2), pages 323-42, March.
- Santos, M.S., 1989. "Differentiability And Comparative Analysis In Discrete-Time Infinite-Horizon Optimization Problems," UFAE and IAE Working Papers 127-89, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Makoto Yano, 1998. "On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy," Econometrica, Econometric Society, vol. 66(2), pages 427-452, March.
- Bewley, Truman, 1982. "An integration of equilibrium theory and turnpike theory," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 233-267, September.
- M. Yano, 2010.
"The Turnpike of Dynamic General Equilibrium Paths and its Insensitivity to Initial Conditions,"
Levine's Working Paper Archive
1394, David K. Levine.
- Yano, Makoto, 1984. "The turnpike of dynamic general equilibrium paths and its insensitivity to initial conditions," Journal of Mathematical Economics, Elsevier, vol. 13(3), pages 235-254, December.
- Yano, Makoto, 1991. "Temporary transfers in a simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 54(2), pages 372-388, August.
- Santos, Manuel S., 1992. "Differentiability and comparative analysis in discrete-time infinite-horizon optimization," Journal of Economic Theory, Elsevier, vol. 57(1), pages 222-229.
When requesting a correction, please mention this item's handle: RePEc:ube:dpvwib:dp0213. 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: (Silvia Glusstein-Gerber)
If references are entirely missing, you can add them using this form.