Artikel
Indeterminacy and multiplicity of equilibria in a two-sector economy with a public-sector production
We introduce government production of both output-augmenting and utility-enhancing public services into an exogenous growth model with a detailed government sector, and calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We show that in contrast to the case without government output, e.g., Vasilev (2009), when the economy features saddle-path stability, the presence of a second sector leads to equilibrium indeterminacy in the model. When public sector production adds to private sector output, the setup exhibits "sink" dynamics, and equilibrium paths are determined by "animal spirits." These results are in line with the findings in the literature, e.g., Benhabib and Farmer (1994, 1996) and Farmer (1999), and have major implications for policy-making and welfare.
- Language
-
Englisch
- Bibliographic citation
-
Journal: Journal of Economics and Econometrics ; ISSN: 2032-9660 ; Volume: 64 ; Year: 2019 ; Issue: 3 ; Pages: 1-16 ; Brussels: The Economics and Econometrics Research Institute
- Classification
-
Wirtschaft
Business Fluctuations; Cycles
Investment; Capital; Intangible Capital; Capacity
- Subject
-
Equilibrium indeterminacy
government production
animal spirits
two-sector model
- Event
-
Geistige Schöpfung
- (who)
-
Vasilev, Aleksandar
- Event
-
Veröffentlichung
- (who)
-
The Economics and Econometrics Research Institute
ZBW – Leibniz Information Centre for Economics
- (where)
-
Brussels
- (when)
-
2019
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Vasilev, Aleksandar
- The Economics and Econometrics Research Institute
- ZBW – Leibniz Information Centre for Economics
Time of origin
- 2019
Other Objects (12)
Indeterminacy and multiplicity of equilibria in a two-sector economy with a public-sector production
Macroeconomic effects of public-sector unions
Essays on Real Business Cycle Modeling and the Public Sector
Aggregation with sequential non-convex public- and private-sector labor suply decisions
Insurance-markets Equilibrium with Sequential Non-convex Private- and Public-Sector Labor Supply
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
Cyclical and welfare effects of public sector unions in a Real-Business-Cycle model
Insurance-markets Equilibrium with Sequential Non-convex Market-Sector and Divisible Informal-Sector Labor Supply
Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours
Macroeconomic effects of public-sector unions
Fiscal policy in a Real-Business-Cycle model with labor-intensive government services and endogenous public sector wages and hours
Indeterminacy and multiplicity of equilibria in a two-sector economy with a public-sector production
Macroeconomic effects of public-sector unions
Essays on Real Business Cycle Modeling and the Public Sector
Aggregation with sequential non-convex public- and private-sector labor suply decisions
Insurance-markets Equilibrium with Sequential Non-convex Private- and Public-Sector Labor Supply
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
Cyclical and welfare effects of public sector unions in a Real-Business-Cycle model
Insurance-markets Equilibrium with Sequential Non-convex Market-Sector and Divisible Informal-Sector Labor Supply
Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours
Macroeconomic effects of public-sector unions
Fiscal policy in a Real-Business-Cycle model with labor-intensive government services and endogenous public sector wages and hours
Indeterminacy and multiplicity of equilibria in a two-sector economy with a public-sector production
Macroeconomic effects of public-sector unions
Essays on Real Business Cycle Modeling and the Public Sector
Aggregation with sequential non-convex public- and private-sector labor suply decisions
Insurance-markets Equilibrium with Sequential Non-convex Private- and Public-Sector Labor Supply
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
On the cost of opportunistic behavior in the public sector: A General-Equilibrium approach
Cyclical and welfare effects of public sector unions in a Real-Business-Cycle model
Insurance-markets Equilibrium with Sequential Non-convex Market-Sector and Divisible Informal-Sector Labor Supply
Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours
Macroeconomic effects of public-sector unions