Mino, Kazuo (2002): Indeterminacy in Two-Sector Models of Endogenous Growth with Leisure.
Download (251Kb) | Preview
This paper demonstrates that preference structure may play a pivotal role in generating indeterminacy in the stylized model of endogenous growth. By examining two-sector models of endogenous growth with human capital formation, we show that if the utility function of the representative family is not additively separable between consumption and pure leisure time, indeterminacy may hold even if production technologies satisfy social constant returns. We also examine models with quality leisure in which leisure activities require human capital as well as time. In contrast to the pure-leisure time model, we find that the quality-leisure time model generally needs increasing returns to scale technologies to generate indeterminacy. It is also shown that nonseparability of utility function is crucial for generating indeterminacy in the quality leisure model as well.
|Item Type:||MPRA Paper|
|Original Title:||Indeterminacy in Two-Sector Models of Endogenous Growth with Leisure|
|Keywords:||endogenous growth, two-sector models, endogenous labor supply, indeterminacy|
|Subjects:||O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical
|Depositing User:||Kazuo Mino|
|Date Deposited:||29. Aug 2009 23:40|
|Last Modified:||17. Feb 2013 23:15|
Becker, G.S., 1975, Human capital, Chicago: The University of Chicago Press.
Benhabib, J. and Farmer, R.E.,1994, Intermediacy and growth, Journal of Economic Theory 63, 19-41
Benhabib, J. and Farmer, R.E., 1996, Indeterminacy and sector specific externalities, Journal of Monetary Economics 37, 397-419
Benhabib, J. and Nishimura, K., 1998, Indeterminacy and sunspots with constant returns, Journal of Economic Theory 81, 58-96
Benhabib, J. and Nishimura, K., 1999, Indeterminacy in arising in multi-sector economies, Japanese Economic Review 50, 485-506.
Benhabib, J. Meng, Q. and Nishimura, K., 2000, Indeterminacy under constant returns to scale in mulatisector economies, Econometrica 68, 1541-1548
BN2 : Benhabib, J. and Perli, R., 1994, Uniqueness and indeterminacy: transitional dynamics, Journal of Economic Theory 63, 113-142.
Bennett, R.L. and Farmer, R.E., 2000, Indeterminacy with nonseparable utility, Journal of Economic Theory 93, 118-143
Boldrin : Boldrin, M. and Rustichini, A. , 1994, Indeterminacy of equilibria in models with infinitely-lived agents and external effects, Econometrica 62, 323-342
Bond, E., Wang, P. and Yie, C., 1996, A general two-sector model of endogenous growth with physical and human capital, Journal of Economic Theory 68, 149-173
Gantmancher, F.R., 1974, The theory of matrices (vol.2), New York: Chelsea Publishing Company.
Harrison, S.G., 2001, Indeterminacy in a model with sector-specific externalities, Journal of Economic Dynamics and Control 25, 747-764.
de Hek, P.A.., 1998, An aggregative model of capital accumulation with leisure-dependent utility, Journal of Economic Dynamics and Control 23, 255-276.
Farmer : Ladrón-de-Guevara, A., Ortigueira, S. and Santos, M. S., 1997, Equilibrium dynamics in two sector models of endogenous growth", Journal of Economic Dynamics and Control 21, 115-143
Ladrón-de-Guevara, A., Ortigueira, S. and Santos, M. S., 1999, A Two-sector model of endogenous growth with leisure", Review of Economic Studies 66, 609-631.
Lucas, R.E., 1988, On the mechanics of development, Journal of Monetary Economics 22, 3-42.
Lucas, R.E., 1990, Supply-side economics: an analytical review", Oxford Economic Papers 42, 293-316.
Mino, K., 1996, Analysis of a two-sector model of endogenous growth with capital income taxation, International Economic Review 37, 227-251.
Mino, K., 1999, Nonseparable utility function and indeterminacy of equilibrium in a model with human capital, Economics Letters 62, 311-317.
Mino, K., 2000, Human capital formation and patterns of growth with multiple equilibria, Discussion Paper # 0015, Faculty of Economics, Kobe University.
Mino, K., 2001, Indeterminacy and endogenous growth with social constant returns, Journal of Economic Theory.
Mitra : Mitra, T., 1998, On equilibrium dynamics under externalities in a model of economic development, Japanese Economic Review 49, 85-107.
Ortigueira, S., 2000, A Dynamic analysis of an endogenous growth model with leisure, Economic Theory 16, 43-62.
Pelloni, A. and Waldmann, R., 1998, Stability properties of a growth model, Economics Letters 61, 55-60.
Pelloni, A. and Waldmann, R., 2000, Can west improve welfare?, Journal of Public Economics.77, 45-79.
Perli, R., 1998, Indeterminacy, home production and the business cycles: a calibrated analysis, Journal of Monetary Economics 41, 105-125.
Romer, P.M., 1986, Increasing returns and long run growth, Journal of Political Economy 94, 1002-1034. Schmitt-Grohé, S., 1997, Comparing four models of aggregate fluctuations due to self-fulfilling expectations, Journal of Economic Theory 72, 96-147. Wen, Y., 1998, Capacity utilization under increasing returns to scale, Journal of Economic Theory 81, 7-31. Xie, D., 1994, Divergence in economic performance: transitional dynamics with multiple equilibria, Journal of Economic Theory 63, 97-112.