Distortionary taxes and global indeterminacy in an endogenous growth model with elastic labor supply

Abstract

This paper describes the global properties of the Ben-Gad (2013) economy where goverment public spending is financed by a distortionary taxation, in an endogenous growth framework with sector specific external effects. The application of the original Bogdanov-Takens theorem allows us to characterize the regions of the parametric space where the model exhibits a global indeterminate equilibrium and a low-growth trapping region.