Scandinavian Working Papers in Economics
Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics
No 04-13: Factor Intensity Reversal and Ergodic Chaos
Aditya Goenka () and Odile Poulsen ()
Additional contact information
Aditya Goenka: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Odile Poulsen: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Abstract: This paper studies a two-sector endogenous growth model with
labour augmenting externalities or Harrod-Neutral technical change. The
technologies are general and the preferences are of the CES class. If con-
sumers are su±ciently patient, ergodic chaos and geometric sensitivity to
initial conditions can emerge if either (1) there is factor intensity reversal;
or (2) if the consumption goods producing sector is always capital intensive.
The upper bound on the discount rate is determined only by the transver-
sality condition. If utility is linear, there can be chaos only if there is factor
intensity reversal
Keywords: Ergodic Chaos; Two-sector endogenous growth model; Factor intensity reversal; Labor-augmenting externalities
29 pages, December 10, 2004
Full text files
04-13_agodp.pdf
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