Global indeterminacy in locally determinate RBC models
By: byTarek Coury and Yi Wen
Contributors: Wen, Yi; Federal Reserve Bank of St. Louis
Series: Working paper -- 2007-029A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-029A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: St. Louis, Mo.]
Language: eng
Format: [electronic resource] /
Description: "We investigate the global dynamics of RBC models with production externalities.  We confirm that purely local analysis does not tell the full story.  With externalities smaller than required for local indeterminacy, local analysis shows the steady state to be a saddle, implying a unique equilibrium.  But global analysis reveals the steady state is surrounded by stable deterministic cycles.  Our analysis suggests that indeterminacy is more robust than previously realized, and the results strengthen the view that caution should be exercised when linearized versions of this class of RBC models are used in applied work"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 8/9/2007.

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