Ghiglino, C and Olszak-Duquenne, M (2005) 'On the impact of heterogeneity on indeterminacy.' International Economic Review, 46 (1). 171 - 188. ISSN 0020-6598

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Abstract

Some recent research indicates that the occurrence of indeterminacy in models with externalities may be overstated because these models ignore agents' heterogeneity. We consider a neoclassical two-sector growth model with technological externalities. Agents are heterogeneous with respect to their shares of the initial stock of capital and in labor endowments. We find that the sign of the effect of inequality on indeterminacy is not pinned down by the standard properties of preferences. However, when the inverse of absolute risk aversion is a convex (respectively concave) function, homogeneity (heterogeneity) tends to neutralize the external effects and eliminate indeterminacy.

Item Type:	Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics, Department of
Depositing User:	Jim Jamieson
Date Deposited:	16 Jul 2012 19:27
Last Modified:	23 Jan 2019 00:15
URI:	http://repository.essex.ac.uk/id/eprint/3010

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