The impact of heterogeneity on indeterminacy

Ghiglino, Christian; Olszak-Duquenne, Marielle (November 2002). The impact of heterogeneity on indeterminacy (Diskussionsschriften 02-13). Bern: Universität Bern Volkswirtschaftliches Institut

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The aim of the paper is to explore the link between agent’s heterogeneity and indeterminacy in a general equilibrium economy. The framework is provided by the two-sector growth model with technological externalities of Boldrin and Rustichini (1994) in which heterogeneous agents are introduced. We first show that the occurrence of indeterminacy depends on the distribution in labor endowments and in shares on initial capital among the agents as well as on preferences and technology. We find that the sign of the effect of heterogeneity on indeterminacy is not pinned down by the standard properties of preferences, a fact that might be surprising in view of some recent results (as in Herrendorf et al. (2000)). However, when risk aversion is a concave or a slightly convex function, then heterogeneity is a factor that opposes the external effects in generating indeterminacy.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Ghiglino, Christian

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Diskussionsschriften

Publisher:

Universität Bern Volkswirtschaftliches Institut

Language:

English

Submitter:

Aline Lehnherr

Date Deposited:

11 Jun 2020 16:29

Last Modified:

06 Aug 2020 14:18

JEL Classification:

D30, D50, D90, O41

BORIS DOI:

10.7892/boris.143993

URI:

https://boris.unibe.ch/id/eprint/143993

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