Arbeitspapier

Determinacy Through Intertemporal Capital Adjustment Costs

It is well known that if mild sector–specific 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 sector’s 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 sector’s capital is costly.

Sprache
Englisch

Erschienen in
Series: IEHAS Discussion Papers ; No. MT-DP - 2002/9

Klassifikation
Wirtschaft
Thema
capital adjustment costs
determinacy
local indeterminacy
local stability
sector-specific externality

Ereignis
Geistige Schöpfung
(wer)
Herrendorf, Berthold
Valentinyi, Akos
Ereignis
Veröffentlichung
(wer)
Hungarian Academy of Sciences, Institute of Economics
(wo)
Budapest
(wann)
2002

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Herrendorf, Berthold
  • Valentinyi, Akos
  • Hungarian Academy of Sciences, Institute of Economics

Entstanden

  • 2002

Ähnliche Objekte (12)