Chaos and Sector-Specific Externalities
نویسنده
چکیده
Benhabib and Farmer (1996) explore the possibility of local indeterminacy in a twosector model with sector-specific externalities. They find that very small sector-specific externalities are sufficient for local indeterminacy. In this case, it is possible to construct sunspot equilibria where extrinsic uncertainty matters. In this paper, I provide a global analysis of their model revealing the existence of Euler equation branching. This branching allows for regime switching equilibria with cycles and chaotic behavior. These equilibria occur whether the “local dynamics” are determinate or indeterminate.
منابع مشابه
Indeterminacy in a model with aggregate and sector - specific externalities
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تاریخ انتشار 2007