Equilibrium Cycles in a Two-Sector Economy with Sector Specific Externality

Miki Matsuo; Kazuo Nishimura; Tomoya Sakagami; Alain Venditti

Abstract

In this paper, we study the two-sector CES economy with sector-specific externality (feedback effects). We characterize the equilibrium paths in the case that allows negative externality, and show how the degree of externality may generate equilibrium cycles around the steady state.

Keywords

Difference equations , nonlinear dynamics , bifurcation , two-periodic cycle , multiple equilibria

Miki Matsuo Institute of Economic Research, Kyoto University, Japan.
Kazuo Nishimura Institute of Economic Research, Kyoto University, Japan.
Tomoya Sakagami Department of Economics, Kumamoto Gakuen University, Japan.
Alain Venditti CNRS-GREQAM - Department of Economics, Kumamoto Gakuen University, Japan.

Pages: 65–82
Date Published: 2008-10-01
Vol. 10 No. 3 (2008): CUBO, A Mathematical Journal