Multiple Steady States and Endogenous Fluctuations with Increasing Returns to Scale in Production

The purpose of this paper is to study the influence of the elasticity of capital-labour substitution and of the labour supply elasticity on the existence of multiple Pareto-ranked stationary eqilibria, local indeterminacy, bifurcations and expectations driven fluctuations in economies with external and internal increasing returns to scale in production. This is done through general geometrical methods that do not depend upon particular specifications for preferences and technology.