Economic Theory

, Volume 17, Issue 1, pp 181–195 | Cite as

Factors substitutability, heterogeneity and endogenous fluctuations in a finance constrained economy

  • Jean-Paul Barinci
Research Articles


This paper examines the local properties of perfect foresight equilibrium of a finance constrained economy featuring two classes of infinitely-lived agents with heterogeneous general preferences. It is primarily concerned with the conceivability of endogenous fluctuations for large plausible capital-labor elasticities of substitution. It is notably shown that heterogeneity in preferences allows Hopf cycles to be entirely consistent with a wide range of elasticities of substitution including the unitary one (Cobb-Douglas specifications).

Keywords and Phrases:Heterogeneity, Factors substitutability, Local bifurcations and endogenous fluctuations. 
JEL Classification Numbers:C61, E32. 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2001

Authors and Affiliations

  • Jean-Paul Barinci
    • 1
  1. 1.EUREQua – Université de Paris 1, 106-112, Bd de l'Hôpital, 75647 Paris Cedex 13, FRANCE (e-mail: FR

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