Article ID Journal Published Year Pages File Type
884040 Journal of Economic Behavior & Organization 2011 16 Pages PDF
Abstract

It has been shown that adding variable capacity utilization of capital to a one-sector model with a mild production externality can produce local indeterminacy. In this paper, I provide a global analysis of this model and provide sufficient conditions for the existence of Euler equation branching. I show that this branching allows for regime switching equilibria implying ω-chaos and positive topological entropy – two notions of chaotic behavior.

Research highlights▶ It has been shown that adding variable capacity utilization of capital to a one-sector model with a mild production externality can produce local indeterminacy. In this paper, I provide a global analysis of this model and provide sufficient conditions for the existence of Euler equation branching. I show that this branching allows for regime switching equilibria implying ω-chaos and positive topological entropy – two notions of chaotic behavior.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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