Summary.
We establish conditions under which indeterminacy can occur in a small open economy business cycle model with endogenous labor supply. Indeterminacy requires small externalities in technologies with social constant returns to scale, independently of the intertemporal elasticities in both consumption and labor.
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Received: December 12, 2001; revised version: May 17, 2002
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ID="*"The paper has benefited from discussions with Jess Benhabib and Mark Weder, as well as from the comments of an anonymous referee.
Correspondence to: Q. Meng
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Meng, Q., Velasco, A. Indeterminacy in a small open economy with endogenous labor supply. Econ Theory 22, 661–669 (2003). https://doi.org/10.1007/s00199-002-0308-5
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DOI: https://doi.org/10.1007/s00199-002-0308-5