Autori
Farmer, Roger E. A.
Bennett, Roasalind L.

Titolo
Indeterminacy with non-separable utility
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1999 - Fascicolo: 34 - Pagina iniziale: 1 - Pagina finale: 28

Benhabib and Farmer [3] showed that a single sector growth mode! in thè presence of increasing returns-to-scale may display an indeterminate equilibrium if thè demand and supply curves cross with thè "wrong slopes". We generalize their result to a model with preferences that are non-separable in consumption and leisure. We provide a simple ana-log of thè Benhabib-Farmer condition that works in thè non-separable case. Our condition is easy to check in practice and it allows for equi-libria to be indeterminate, even when demand and supply curves have thè standard slopes. We illustrate that equilibrium can be indeterminate when demand and supply curves have standard slopes and thè degree of increasing returns-to-scale is well within recent estimates by Basu and Fernald [2] for U.S. manufacturing.



Testo completo: http://www.iue.it/ECO/WP-Texts/ECO99-34.pdf

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