Indeterminacy with non-separable utility

J. Benhabib and R. E. A. Farmer (1904, J. Econ Theory 63, 19-41) showed tha t a single sector growth model in the presence of increasing returns-to-sca le may display an indeterminate equilibrium if the demand and supply curves cross with the "wrong slopes." We generalize their result to a model with preferences that are non-separable in consumption and leisure. We provide a simple analog of the Benhabib Farmer condition that works in the non-separ able case. Our condition is easy to check in practice and it allows for equ ilibria to be indeterminate, even when demand and supply curves have the st andard slopes. We illustrate that equilibrium can be indeterminate when dem and and supply curves have standard slopes and the degree of increasing ret urns-to-scale is well within recent estimates by S. Basu and J. Fernald (19 97. J. Polit. Econ. 105, 249-283) for U. S. manufacturing. Journal of Econo mic Literature Classification Numbers: E10. E32, D90. (C) 2000 Academic Pre ss.