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Bifurcation and sunspots in the continuous time equilibrium model with capacity utilization
Author(s) -
Benhabib Jess,
Nishimura Kazuo,
Shigoka Tadashi
Publication year - 2008
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2008.00083.x
Subject(s) - homoclinic orbit , economics , indeterminate , homoclinic bifurcation , mathematical economics , externality , sunspot , bifurcation , mathematics , yield (engineering) , discrete time and continuous time , microeconomics , thermodynamics , physics , pure mathematics , statistics , nonlinear system , quantum mechanics , magnetic field
In the present paper, we construct a continuous time model of economic growth with positive externalities and with variable capacity utilization, and study the global equilibrium paths in this model. If there is a homoclinic orbit or a periodic solution in this model, equilibrium is globally indeterminate. We show that positive externalities can yield multiple steady states, a one‐parameter family of homoclinic orbits, and a two‐parameter family of periodic solutions. It is also shown that there exists a sunspot equilibrium in this model.