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Capital Externalities in Two-Sector Models

Author

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  • Alain Venditti

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

We consider a two-sector economy with positive capital externalities and constant social returns. We first show that local indeterminacy does not require externaleffects from labor but is fundamentaly based on externalities derived from capital in the investment good sector. Second, we show that the external effects in the investment good sector has to be characterized by a low enough amount of capital stock from theconsumption good sector. In other words, the existence of multiple equilibria is ruled out if the externalities are too intersectoral.

Suggested Citation

  • Alain Venditti, 2006. "Capital Externalities in Two-Sector Models," Working Papers halshs-00410761, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00410761
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00410761
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    File URL: https://shs.hal.science/halshs-00410761/document
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    Cited by:

    1. Mohanad Ismael & Francesco Magris, 2008. "Indeterminacy with Externalities and Capital Utilization," Documents de recherche 08-14, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.

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