Non-separable utility function and indeterminacy of equilibrium in a modelwith human capital

This paper shows that non-separability of utility function may produce inde terminacy of equilibrium in the representative agent models with labor leis ure choice. By using a two-sector model of endogenous growth, we show that if the utility function is not additively separable between consumption and leisure, indeterminacy may emerge even in the absence of external increasi ng returns. (C) 1999 Published by Elsevier Science S.A. All rights reserved .