Arbeitspapier
Neoclassical Growth Model with Externalities
This paper explores the local stability properties of the steady state in the twosector neoclassical growth model with sectorspecific externalities. We show analytically that capital adjustment costs of any size preclude local indeterminacy nearby the steady state for every empirically plausible specification of the model parameters. More specifically, we show that when capital adjustment costs of any size are considered, a necessary condition for local indeterminacy is an upward-sloping labor demand curve in the capital-producing sector, which in turn requires an implausibly strong externality. We show numerically that capital adjustment costs of plausible size imply determinacy nearby the steady state for empirically plausible specifications of the other model parameters. These findings contrast sharply with the previous finding that local indeterminacy occurs in the two-sector model for a wide range of plausible parameter values when capital adjustment costs are abstracted from.
- Sprache
-
Englisch
- Erschienen in
-
Series: IEHAS Discussion Papers ; No. MT-DP - 2002/3
- Klassifikation
-
Wirtschaft
- Thema
-
capital adjustment costs
determinacy
externality
local indeterminacy
stability.
- 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, 11:42 MEZ
Datenpartner
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)
Neoclassical Growth Model with Overlapping Generations
Intergenerational altruism and neoclassical growth models
Capital Mobility in Neoclassical Models of Growth
Inequality and aggregate savings in the neoclassical growth model
Regional Convergence in Russia: Estimating a Neoclassical Growth Model
Pollution externalities in a Schumpeterian growth model
Pollution externalities in a Schumpeterian growth model
The Neoclassical Growth of China
On Ramsey's conjecture: Efficient allocations in the neoclassical growth model with private information
Neoclassical growth with long-term one-sided commitment contracts
Neoclassical growth with long-term one-sided commitment contracts
Some results on the solution of the neoclassical growth model
Neoclassical Growth Model with Overlapping Generations
Intergenerational altruism and neoclassical growth models
Capital Mobility in Neoclassical Models of Growth
Inequality and aggregate savings in the neoclassical growth model
Regional Convergence in Russia: Estimating a Neoclassical Growth Model
Pollution externalities in a Schumpeterian growth model
Pollution externalities in a Schumpeterian growth model
The Neoclassical Growth of China
On Ramsey's conjecture: Efficient allocations in the neoclassical growth model with private information
Neoclassical growth with long-term one-sided commitment contracts
Neoclassical growth with long-term one-sided commitment contracts
Some results on the solution of the neoclassical growth model
Neoclassical Growth Model with Overlapping Generations
Intergenerational altruism and neoclassical growth models
Capital Mobility in Neoclassical Models of Growth
Inequality and aggregate savings in the neoclassical growth model
Regional Convergence in Russia: Estimating a Neoclassical Growth Model
Pollution externalities in a Schumpeterian growth model
Pollution externalities in a Schumpeterian growth model
The Neoclassical Growth of China
On Ramsey's conjecture: Efficient allocations in the neoclassical growth model with private information
Neoclassical growth with long-term one-sided commitment contracts
Neoclassical growth with long-term one-sided commitment contracts