Complex Dynamics in the Neoclassical Growth Model with Differential Savings and Non-Constant Labor Force Growth

Brianzoni Serena (), Mammana Cristiana () and Michetti Elisabetta ()
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Brianzoni Serena: Department of Economic and Financial Institutions, University of Macerata, Italy
Mammana Cristiana: Department of Economic and Financial Institutions, University of Macerata, Italy
Michetti Elisabetta: Department of Economic and Financial Institutions, University of Macerata, Italy

Studies in Nonlinear Dynamics & Econometrics, 2007, vol. 11, issue 3, 19

Abstract: In this paper we analyze the dynamics shown by the neoclassical one-sector growth model with differential savings as in Bohm and Kaas (2000) while assuming CES production function and the labour force dynamic described by the Beverton Holt equation (see Beverton and Holt, 1957). The resulting dynamic system is bidimensional, autonomous and triangular: we investigate its qualitative and quantitative dynamic properties. The study herewith presented aims at confirming that the system can exhibit cycles or even a chaotic dynamic pattern, if shareholders save more than workers, when the elasticity of substitution drops below one (so that capital income declines). The analytical results are supplemented by numerical experiments.

Date: 2007
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DOI: 10.2202/1558-3708.1407

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