Some macroeconomic models exhibit a type of global indeterminacy known as Euler equation branching (e.g., the one-sector growth model with a production externality). The dynamics in such models are governed by a differential inclusion. In this paper, we show that in models with Euler equation...

I extend the Atkeson and Kehoe (1999) putty-clay model to include elastic labor supply and more general forms of technology to explore the impact of oil shocks on the macroeconomy. In particular, I am interested in (1) how this extension affects their results with regard to permanent changes in...

In this paper, we provide a framework for calculating expected utility in models with chaotic equilibria and consequently a framework for ranking chaos. Suppose that a dynamic economic model’s equilibria correspond to orbits generated by a chaotic dynamical system f : X ! X where X is a...

Does consideration of sunspot equilibria in the cash-in-advance model help the model match key features in the US macroeconomic data? One can use the cash-in-advance model to generate predictions of macro time series via an equilibrium of the model. However, when restricted to minimum state...

Some economic models like the cash-in-advance model of money have the property that the dynamics are ill-defined going forward in time, but well-defined going backward in time. In this paper, we apply the theory of inverse limits to characterize topologically all possible solutions to a dynamic...

Motivated by problems from dynamic economic models, we consider the problem of defining a uniform measure on inverse limit spaces. Let f be a function from a compact metric space X into itself where f is continuous, onto and piecewise one-to-one. Let Y be the inverse limit of (X,f). Then...

Benhabib and Farmer (1996) explore the possibility of local indeterminacy in a twosector model with sector-speci c externalities. They nd that very small sector-specific externalities are su cient for local indeterminacy. In this case, it is possible to construct sunspot equilibria where...