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Multiple equilibria in the Aghion–Howitt model

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  • Benhabib, Jess

Abstract

We show that the simple Aghion–Howitt model exhibits oscillatory indeterminacy in the process of creative destruction as firms undertaking new research do not internalize their effect on existing firms. A simple calibration shows that indeterminacy occurs for quite plausible parametrizations of the share of the intermediate good.

Suggested Citation

  • Benhabib, Jess, 2014. "Multiple equilibria in the Aghion–Howitt model," Research in Economics, Elsevier, vol. 68(2), pages 112-116.
    • Handle: RePEc:eee:reecon:v:68:y:2014:i:2:p:112-116
    DOI: 10.1016/j.rie.2013.10.002
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    References listed on IDEAS

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Shleifer, Andrei, 1986. "Implementation Cycles," Journal of Political Economy, University of Chicago Press, vol. 94(6), pages 1163-1190, December.
    3. Kiminori Matsuyama, 1999. "Growing Through Cycles," Econometrica, Econometric Society, vol. 67(2), pages 335-348, March.
    4. Benhabib, Jess & Perli, Roberto & Xie, Danyang, 1994. "Monopolistic competition, indeterminacy and growth," MPRA Paper 37411, University Library of Munich, Germany, revised 1994.
    5. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

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    2. Kiminori Matsuyama & Iryna Sushko & Laura Gardini, 2014. "Globalization and Synchronization of Innovation Cycles," Discussion Papers 1527, Centre for Macroeconomics (CFM), revised Dec 2014.

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