Abstract
It is now well-known from the seminal contributions of Benhabib and Nishimura [3] and Boldrin and Montrucchio [6] that two-sector optimal growth models may be characterized by regular or irregular endogenous fluctuations. More recently, a growing literature has focused on the existence of stochastic fluctuations based on market imperfections such that external effects.1 In the recent literature, some simple conditions for the existence of endogenous and stochastic fluctuations have been provided for two-sector models with Cobb-Douglas technologies. In most of the contributions it is assumed that the capital fully depreciates every period. This much criticized assumption has been proved to be quite particular by Baierl, Nishimura and Yano [1].
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References
Baierl, G., Nishimura, K., and M. Yano (1998): “The Role of Capital Depreciation in Multi-Sectoral Models,” Journal of Economic Behavior and Organization, 33, 467–479.
Benhabib, J., and R. Farmer (1999): “Indeterminacy and Sunspots in Macroeconomics, In J.B. Taylor and M. Woodford, eds, Handbook of Macroeconomics, 1A, 387–448.
Benhabib, J., and K. Nishimura (1985): “Competitive Equilibrium Cycles,” Journal of Economic Theory, 35, 284–306.
Benhabib, J., and K. Nishimura (1998): “Indeterminacy and Sunspots with Constant Returns,” Journal of Economic Theory, 81, 58–96.
Benhabib, J., Nishimura, K., and A. Venditti (1998): “Indeterminacy and Cycles in Two-Sector Discrete-Time Models,” mimeograph.
Boldrin, M., and L. Montrucchio (1986): “On the Indeterminacy of Capital Accumulation Paths”, Journal of Economic theory, 40, 29–36.
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Nishimura, K., Venditti, A. (2001). Capital Depreciation, Indeterminacy and Cycles in Two-Sector Economies. In: Negishi, T., Ramachandran, R.V., Mino, K. (eds) Economic Theory, Dynamics and Markets. Research Monographs in Japan-U.S. Business & Economics, vol 5. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-1677-4_14
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DOI: https://doi.org/10.1007/978-1-4615-1677-4_14
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