Homoclinic bifurcation and global indeterminacy of equilibrium in a two-sector endogenous growth model

Abstract

If for a given endogenous growth model, there exists a continuum of equilibria in a small neighborhood of a balanced growth path (BGP) that continues to stay in this neighborhood, it is said that equilibrium is locally indeterminate. Here a small neighborhood of a BGP means the region in which results based on linear approximations of equilibrium dynamics on the BGP are qualitatively valid.