Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46355 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3184
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Motivated by the process of economic development in Eastern Germany since the German reunification we set up a dynamic macroeconomic model of a small open economy where both capital and labor are mobile and there are increasing returns to scale at the aggregate level. The model features multiple equilibria as well as (local and global) indeterminacy. Expectations matter for resulting equilibrium dynamics, implying that economic confidence may be crucial for the process of economic development. Despite its simplicity, the model can replicate major empirical facts and bears a number of non-trivial implications.
Subjects: 
increasing returns to scale
capital mobility
migration
multiple equilibria
indeterminacy
history vs. expectations
economic policy
JEL: 
E60
H20
O40
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size
506.61 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.