Multiple steady states and endogenous fluctuations with increasing returns to scale in production

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From: Journal of Economic Theory(Vol. 80, Issue 1)
Publisher: Elsevier B.V.
Document Type: Article
Length: 83 words

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Abstract :

A model is developed wherein external and internal increasing returns to scale in production is made to influence the elasticity of capital-labor susbsititutions and the elasticity of labor supply. Particular emphasis on monitoring the influence of such factors on multiple-Pareto ranked stationary equilibria, local indeterminacy, bifurcations and expectations-driven fluctuations were noted. An interesting sidelight of the research was the inapplicability of the Cobb-Douglas model to the problem since the closed-form solutions of the model is misleading in terms of the measure of elasticities.

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Gale Document Number: GALE|A20885839