Indeterminacy and nonlinear dynamics in an OLG growth model with endogenous labour supply and inherited tastes

Luca Gori () and Mauro Sodini ()

Decisions in Economics and Finance, 2014, vol. 37, issue 1, 159-179

Abstract: This study analyses the dynamics of a two-dimensional overlapping generations economy with endogenous labour supply à la Reichlin (J Econ Theory 40(1):89–102, 1986 ) and aspirations. We show that the degree of nonlinearity of consumption externality in individual utility is responsible for the existence of either one steady state or two steady states. In addition, some interesting global dynamic properties, such as cyclical behaviour and/or global indeterminacy, emerge depending on the relative importance of aspirations in utility. Copyright Springer-Verlag Italia 2014

Keywords: Aspirations; Indeterminacy; Labour supply; OLG model; Nonlinear dynamics; C61; C62; C68; J22; O41 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Indeterminacy and nonlinear dynamics in an OLG growth model with endogenous labour supply and inherited tastes (2012)
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DOI: 10.1007/s10203-013-0146-x

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