Indeterminacy and Investment Adjustment Costs
نویسنده
چکیده
It has been widely known that neoclassical growth models with su¢cient increasing returns in production may feature indeterminacy. This note shows that investment adjustment costs increase the required degree of increasing returns for indeterminacy to arise. Under empirically plausible levels of investment adjustment costs, we need implausibly large degree of increasing returns to generate indeterminacy.
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