Can heterogeneous preferences stabilize endogenous fluctuations?

Stefano Bosi () and Thomas Seegmuller ()
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Stefano Bosi: EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - PRES Université Lille Nord de France - Université de Lille, Droit et Santé, EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne
Thomas Seegmuller: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: While most of the literature concerned with indeterminacy and endogenous cycles is based on the questionable assumption of a representative consumer, some recent works have investigated the role of heterogeneous agents on dynamics. This paper adds a contribution to the debate, highlighting the effects of heterogeneity in consumers' preferences within an overlapping generations economy with capital accumulation, endogenous labor supply and consumption in both periods. Using a mean-preserving approach to heterogeneity, we show that increasing the dispersion of propensities to save turns out to stabilize the macroeconomic volatility, by reducing the range of parameters compatible with indeterminacy and ruling out expectations-driven fluctuations under a sufficiently large heterogeneity.

Keywords: Endogenous fluctuations; heterogeneous preferences; mean-preserving dispersion; overlapping generations; dispersion préservant la moyenne; générations imbriquées; préférences hétérogènes; Fluctuations endogènes (search for similar items in EconPapers)
Date: 2006-12
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00130200
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Published in 2006

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Related works:
Journal Article: Can heterogeneous preferences stabilize endogenous fluctuations (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2006)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2006)
Working Paper: Can Heterogeneous Preferences Stabilize Endogenous Fluctuations? (2005)
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