Indeterminacy and investment adjustment costs: An analytic result

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

It has been widely known that neoclassical growth models with sufficient increasing returns in production may feature indeterminacy. This note analytically 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 an implausibly large degree of increasing returns to generate indeterminacy.

Original languageEnglish
Pages (from-to)394-406
Number of pages13
JournalMacroeconomic Dynamics
Volume7
Issue number3
DOIs
Publication statusPublished - 2003 Jun
Externally publishedYes

Keywords

  • Indeterminacy
  • Investment Adjustment Costs

ASJC Scopus subject areas

  • Economics and Econometrics

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