Jump to ContentJump to Main Navigation
Dimensions of Economic Theory and PolicyEssays for Anjan Mukherji$
Users without a subscription are not able to see the full content.

Krishnendu Ghosh Dastidar, Hiranya Mukhopadhyay, and Uday Bhanu Sinha

Print publication date: 2011

Print ISBN-13: 9780198073970

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780198073970.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 26 January 2021

Multiple Equilibria in a Dynamic Two Country Model

Multiple Equilibria in a Dynamic Two Country Model

(p.68) 5 Multiple Equilibria in a Dynamic Two Country Model
Dimensions of Economic Theory and Policy

Kazumichi Iwasa

Kazuo Nishimura

Oxford University Press

Some market distortional factors such as factor-generated externalities and imperfect competition can give rise to multiple equilibrium paths, or indeterminacy, in dynamic general equilibrium models. Despite numerous studies on indeterminacy in two-country models, it is assumed that either market distortional factors or inferiority in consumption (one good is an inferior good at the steady state) will make indeterminacy possible. This chapter considers a dynamic two-country model with technological differences and illustrates how indeterminacy can arise even without any market distortional factor and inferiority in consumption. In cases where a pure consumption good is more labour-intensive than a consumable capital good, the chapter demonstrates that multiple equilibrium paths arise when the former is inferior. In cases where a pure consumption good is more capital-intensive than a consumable capital good, multiple equilibrium paths can arise even when both goods are normal.

Keywords:   indeterminacy, two-country models, market distortional factors, externalities, imperfect competition, multiple equilibrium paths, pure consumption good, consumable capital good

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .