Indeterminacy in endogenous growth models

Abstract

This chapter examines endogenous growth models in which equilibrium intermediacy may emerge. It is known that some endogenous growth models assume that there is no market distortion and that every production factor is reproducible under constant returns to scale technologies. In this class of models, the perfect-foresight competitive equilibrium coincides with the optimal growth path of a social planning problem, so that equilibrium indeterminacy will not arise in those models. However, the majority of endogenous growth models assume the presence of technological spillover and external effects to sustain continuing growth in the absence of exogenous technical change.