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Admiration is a source of multiple equilibria and indeterminacy: A comment on Chen and Hsu (2007)

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  • Karasawa-Ohtashiro, Yukio
  • Cai, Dapeng
  • Yanase, Akihiko

Abstract

The aim of this note is to revise and correct the properties of steady state(s) obtained in Chen and Hsu (2007). They proved that admiration and decreasing marginal impatience may establish indeterminacy when the steady state is unique. Instead, we prove that, in the long-run equilibrium (equilibria), (i) indeterminacy never occurs when the steady state is unique, and (ii) indeterminacy may occur only when the steady states are not unique.

Suggested Citation

  • Karasawa-Ohtashiro, Yukio & Cai, Dapeng & Yanase, Akihiko, 2018. "Admiration is a source of multiple equilibria and indeterminacy: A comment on Chen and Hsu (2007)," Economics Letters, Elsevier, vol. 168(C), pages 141-143.
    • Handle: RePEc:eee:ecolet:v:168:y:2018:i:c:p:141-143
    DOI: 10.1016/j.econlet.2018.04.018
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    References listed on IDEAS

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    1. Chen, Been-Lon & Hsu, Mei, 2007. "Admiration is a source of indeterminacy," Economics Letters, Elsevier, vol. 95(1), pages 96-103, April.
    2. Kazuo Mino, 2017. "Growth and Business Cycles with Equilibrium Indeterminacy," Advances in Japanese Business and Economics, Springer, number 978-4-431-55609-1, July.
    3. Benhabib, Jess & Farmer, Roger E.A., 1999. "Indeterminacy and sunspots in macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 6, pages 387-448, Elsevier.
    4. Das, Mausumi, 2003. "Optimal growth with decreasing marginal impatience," Journal of Economic Dynamics and Control, Elsevier, vol. 27(10), pages 1881-1898, August.
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    Cited by:

    1. Akihiko Yanase & Yukio Karasawa-Ohtashiro, 2019. "Endogenous time preference, consumption externalities, and trade: multiple steady states and indeterminacy," Journal of Economics, Springer, vol. 126(2), pages 153-177, March.

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    More about this item

    Keywords

    Consumption externality; Neoclassical growth model; Multiple steady state; Indeterminacy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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