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On the Impact of Heterogeneity on Indeterminacy

Ghiglino, Christian and Olszak-Duquenne, Marielle On the Impact of Heterogeneity on Indeterminacy. [UNSPECIFIED]

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Abstract

Some recent research indicates that the occurrence of indeterminacy in mod- els with externalities may be overstated because these models ignore agents’ heterogene- ity. We consider a neoclassical two-sector growth model with technological externalities. Agents are heterogenous in 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 in- verse of absolute risk aversion is a convex (respectively concave) function homogeneity (heterogeneity) tends to neutralize the external effects and eliminate indeterminacy.

Item Type: UNSPECIFIED
Uncontrolled Keywords: D30 D50 D90 O41, endogenous growth, heterogeneity, indeterminacy, inequalities, income distribution.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2012 19:15
Last Modified: 17 Aug 2017 18:10
URI: http://repository.essex.ac.uk/id/eprint/3012

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