Asymmetric Factor Substitutability and Indeterminacy |
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Authors: | Email author" target="_blank">Kazuo?NishimuraEmail author Alain?Venditti |
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Institution: | (1) Institute of Economic Research, Kyoto University, Yoshida-Honmachi, Sakyo-ku, Kyoto 606, Japan;(2) GREQAM, 2 rue de la Charité, 13002 Marseille, France |
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Abstract: | We consider a discrete-time two-sector CES economy with sector specific external effects in which factor substitutability differs across sectors. For this general model, we provide sufficient conditions on the elasticities of capital/labor substitution for local indeterminacy of equilibria.Acknowledgement We would like to thank two anonymous referees, the editor Dieter Bös and Tapan Mitra for comments on an earlier version of this paper, previously entitled Capital Depreciation, Factors Substitutability and Indeterminacy , which allowed us to improve considerably the results. |
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Keywords: | sector specific externalities elasticity of capital-labor substitution constant social returns local indeterminacy |
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