Indeterminacy in a Small Open Economy Ramsey Growth Model

Weder, Mark

doi:10.1006/jeth.2000.2734

Cited by 54 publications

(61 citation statements)

References 8 publications

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“…Introduction of physical capital, an endogenous labor-leisure choice, externalities in the research sector, sector specific external effects, etc., would be simple ways of reducing the required degree of increasing returns. Two recent papers by Meng and Velasco (1998) and Weder (1998) both confirm this point in the context of models with physical capital. In fact, the model of Meng and Velasco has no increasing returns to scale at all.…”

Section: An Examplesupporting

confidence: 56%

Growth and equilibrium indeterminacy: the role of capital mobility

Lahiri¹

2001

Econ Theory

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The paper presents a human capital driven endogenous growth model which, in general, permits a multiplicity of equilibrium balanced growth paths. It is shown that allowing for perfect capital mobility across countries increases the range of parameter values for which the model permits equilibrium indeterminacy. As opposed to the closed capital markets case, simple restrictions on preferences are no longer sufficient to eliminate the indeterminacy. Intuitively, under perfect capital mobility agents are able to smooth consumption completely. This induces an economy with open capital markets to behave like a closed economy with linear preferences thereby increasing the possibility of equilibrium indeterminacy.

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Section: An Examplesupporting

confidence: 56%

Growth and equilibrium indeterminacy: the role of capital mobility

Lahiri¹

2001

Econ Theory

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“…Thus, for open economies facing a perfect bond market, indeterminacy can obtain under empirically plausible conditions. This paper is also a realistic extension of Weder [15] and related work in the literature, in that we incorporate endogenous labor supply to an otherwise standard Ramsey model of a small open economy. In such a small open economy model with inelastic labor supply, Weder [15] shows that indeterminacy can obtain more easily than a closed-economy variant of Benhabib and Farmer [3].…”

Section: Introductionmentioning

confidence: 99%

Indeterminacy in a small open economy with endogenous labor supply

Meng

Velasco

2003

Economic Theory

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We establish conditions under which indeterminacy can occur in a small open economy business cycle model with endogenous labor supply. Indeterminacy requires small externalities in technologies with social constant returns to scale, independently of the intertemporal elasticities in both consumption and labor. Copyright Springer-Verlag Berlin Heidelberg 2003Keywords and Phrases: Indeterminacy, Small open economy, Business cycles., JEL Classification Numbers: E32, F12, F4.,

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“…6 See also Benhabib and Farmer (1996), Benhabib and Nishimura (1998), ), Weder (2001), Benhabib, et al (2002 and Nishimura and Venditti (2002), among others.…”

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confidence: 99%

General Fund Financing, Earmarking, Economic Stabilization, and Welfare

Chen

Lee

2009

Public Finance Review

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Discussion has been made concerning pros and cons of the ways of financing public projects via either earmarking or general fund based upon a public finance approach. The paper studies the implications of desirability of earmarked and general fund based upon economic stabilization in a two-sector growth model. Regardless of the nature of public goods, earmarked tax contributes to aggregate stabilization, while general fund may be destabilizing and cause fluctuations. The underlying mechanism in favor of earmarked taxes against general fund is that general fund creates intersectoral externalities and strategic complementarities that is sufficiently large to exert endogenously persistent and recurring fluctuations in aggregate activities in the absence of shocks to fundamentals. Earmarked taxing generates only sector-specific externalities that are too small to exert local indeterminacy. In a calibrated version, we compute the level of long-run welfare and the results reflect favorably upon the use of earmarked taxing.

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Indeterminacy in a Small Open Economy Ramsey Growth Model

Cited by 54 publications

References 8 publications

Growth and equilibrium indeterminacy: the role of capital mobility

Growth and equilibrium indeterminacy: the role of capital mobility

Indeterminacy in a small open economy with endogenous labor supply

General Fund Financing, Earmarking, Economic Stabilization, and Welfare

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