Arbeitspapier
Determinacy Through Intertemporal Capital Adjustment Costs
It is well known that if mild sectorspecific externalities are considered, then the steady state of the standard two-sector real business cycle model can become locally indeterminate and endogenous business cycles can arise. We show that this result is not robust to the introduction of standard intertemporal capital adjustment costs, which may accrue when total capital is adjusted or when each sectors capital is adjusted. We find for both forms of adjustment costs that the steady state is determinate for all empirically plausible parameter values. We also find that determinacy occurs for a much larger range of parameter values when adjusting each sectors capital is costly.
- Language
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Englisch
- Bibliographic citation
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Series: IEHAS Discussion Papers ; No. MT-DP - 2002/9
- Classification
-
Wirtschaft
- Subject
-
capital adjustment costs
determinacy
local indeterminacy
local stability
sector-specific externality
- Event
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Geistige Schöpfung
- (who)
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Herrendorf, Berthold
Valentinyi, Akos
- Event
-
Veröffentlichung
- (who)
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Hungarian Academy of Sciences, Institute of Economics
- (where)
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Budapest
- (when)
-
2002
- Handle
- Last update
-
10.03.2025, 11:43 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
- Arbeitspapier
Associated
- Herrendorf, Berthold
- Valentinyi, Akos
- Hungarian Academy of Sciences, Institute of Economics
Time of origin
- 2002
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