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Indeterminacy and market instability

By Kong-Weng Ho and Nicholas Sim

Abstract

This note shows that indeterminacy arising from an economy exhibiting production with social constant returns to scale may be related to the instability of the consumption goods market equilibrium. Furthermore, trade does not contribute to indeterminacy indeterminacy arises becasue each country's equilibrium path is already indeterminate before trade.

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Citations

  1. (1994). Indeterminacy and increasing returns to scale,
  2. (1996). Indeterminacy and sector-speciļ¬c externalities,
  3. (1998). Indeterminacy and sunspots with constant returns,
  4. (2002). Trade and indeterminacy in a dynamic general equilibrium model,

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