Imbalance Effects in the Lucas Model: An Analytical Exploration

CORE Discussion Paper No. 2004/8

16 Pages Posted: 28 Feb 2007

See all articles by Raouf Boucekkine

Raouf Boucekkine

Universite Catholique de Louvain

J. R. Ruiz Tamarit

University of Valencia - Department of Economic Analysis; Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales

Date Written: April 2004

Abstract

In this note, we use a technique analogous to Xie's method (1994) to solve analytically the Lucas model with externality in a specific parametric case. In particular, we characterize the shape of imbalance effects in this model. Our results are entirely consistent with the findings of the related computational literature. Moreover, our analytical investigation tends to show that these findings are robust to the presence of the Lucas externality as long as a unique equilibrium path exist.

Keywords: imbalance effects, Lucas model, externality, analytical solution

JEL Classification: C61, C62, O41

Suggested Citation

Boucekkine, Raouf and Ruiz Tamarit, José Ramón, Imbalance Effects in the Lucas Model: An Analytical Exploration (April 2004). CORE Discussion Paper No. 2004/8, Available at SSRN: https://ssrn.com/abstract=965694 or http://dx.doi.org/10.2139/ssrn.965694

Raouf Boucekkine (Contact Author)

Universite Catholique de Louvain ( email )

3, Place Montesquieu
Institut de Recherches Economiques et Sociales (IRES)
1348 Louvain-la-Neuve
Belgium
+32 10 47 38 48 (Phone)
+32 10 47 39 45 (Fax)

José Ramón Ruiz Tamarit

University of Valencia - Department of Economic Analysis ( email )

Av. dels Tarongers s/n
46022 Valencia
Spain
34 96 3828250 (Phone)
34 96 3828249 (Fax)

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium