Working paper 2012-21
Equilibres Multiples, Croissance Endogène et Politiques Publiques
Public policies can change the number of equilibria in an endogenous growth model. This work shows that in a growth model with monopolistic competition the existence of externalities not internalized by the agents can result in a multiplicity of equilibria. Government intervention in the economy can have an impact on this multiplicity by the management of externalities and adverse effects of imperfect competition. However inefficient public intervention can make the economy converge to a suboptimal equilibrium. To this end, we develop a macroeconomic model for a closed economy that has a perfectly competitive sector of final goods and a sector of monopolistically competitive intermediate goods. In order to identify the effects of a public policy on this model we simulate.
Keywords : multiple equilibria; endogenous growth; public policies