KCI 등재
Indeterminacy, maintenance expenditures and capital-labour substitution elasticity
( Dou Jiang )
한양대학교 경제연구소 2019
JOURNAL OF ECONOMIC RESEARCH 24권  1호 31-48(18pages)
UCI I410-ECN-0102-2021-300-000324422

Recent research in macroeconomics has focused on the possibility of indeterminacy since a model with indeterminacy can generate business cycles that are driven by sunspots. However, most of existing works in this area build on the Cobb-Douglas production function, which seems not empirically plausible. This paper departs from unitary values for the elasticity of capital-labour substitution in production and investigates the role of capital-labour substitution elasticity on the occurrence of indeterminacy. I show that in a two-sector model with maintenance expenditures, the minimum degree of externalities required for indeterminacy is much lower than its one-sector predecessor. Moreover, results show that indeterminacy may still occur when the elasticity of labour supply is within the range of empirical plausibility.

1 Introduction
2 The model
3 Quantitative analysis
4 Conclusion
References
Appendix