Indeterminacy arising in multi-sector economies

Jess Benhabib, Kazuo Nishimura

    Research output: Contribution to journalArticle

    Abstract

    We characterize a large class of constant-returns-to-scale economies with standard Cobb-Douglas production technologies, which, when perturbed to incorporate external effects, exhibit indeterminacy or multiple equilibria. The perturbations are constrained to maintain overall constant returns to scale. We characterize the magnitude of the external effects that yield multiple equilibria in terms of the parameters of the unperturbed economy. We show that it is very easy to construct large and plausible classes of economies that exhibit indeterminacy with constant returns to scale, and with external effects that are arbitrarily small.

    Original languageEnglish (US)
    Pages (from-to)485-506
    Number of pages22
    JournalJapanese Economic Review
    Volume50
    Issue number4
    StatePublished - Dec 1999

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    External effects
    Returns to scale
    Indeterminacy
    Multiple equilibria
    Cobb-Douglas
    Perturbation
    Production technology
    Scale economies

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Benhabib, J., & Nishimura, K. (1999). Indeterminacy arising in multi-sector economies. Japanese Economic Review, 50(4), 485-506.

    Indeterminacy arising in multi-sector economies. / Benhabib, Jess; Nishimura, Kazuo.

    In: Japanese Economic Review, Vol. 50, No. 4, 12.1999, p. 485-506.

    Research output: Contribution to journalArticle

    Benhabib, J & Nishimura, K 1999, 'Indeterminacy arising in multi-sector economies', Japanese Economic Review, vol. 50, no. 4, pp. 485-506.
    Benhabib J, Nishimura K. Indeterminacy arising in multi-sector economies. Japanese Economic Review. 1999 Dec;50(4):485-506.
    Benhabib, Jess ; Nishimura, Kazuo. / Indeterminacy arising in multi-sector economies. In: Japanese Economic Review. 1999 ; Vol. 50, No. 4. pp. 485-506.
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