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| Author: | Barinci, J.-P. |
| Title: | Factors substitutability, heterogeneity and endogenous fluctuations in a finance constrained economy |
| Journal: | Economic Theory
2001 : VOL. 17:1, p. 181-195 |
| Index terms: | FACTOR SUBSTITUTION FINANCE ECONOMIC CONDITIONS COMPETITIVE EQUILIBRIUM |
| Language: | eng |
| Abstract: | This paper examines the local properties of perfect foresight equilibrium of a finance constrained economy featuring two classes of infinitely-lived agents with heterogeneous general preferences. It is primarily concerned with the conceivability of endogenous fluctuations for large plausible capital-labor elasticities of substitution. It is notably shown that heterogeneity in preferences allows Hopf cycles to be entirely consistent with a wide range of elasticities of substitution including the unitary one (Cobb-Douglas specifications). The paper consists of three parts. The first part presents the economy. The second part characterizes the competitive equilibrium with perfect foresight. Section three deals with the local study of local dynamic. The proofs are gathered in appendix. |
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