Cycles and chaos in the one-sector growth model with elastic labor supply

Gerhard Sorger

Economic Theory, 2018, vol. 65, issue 1, No 3, 55-77

Abstract: Abstract It is shown that the discrete-time version of the neoclassical one-sector optimal growth model with elastic labor supply and standard monotonicity and convexity assumptions on technology and preferences can have periodic solutions of any period as well as chaotic solutions. The optimality of these non-monotonic solutions is traced back to strong income effects. When technology and preferences are parameterized as it is commonly done in quantitative macroeconomic studies, these phenomena cannot occur.

Keywords: Optimal growth; Endogenous labor supply; Periodic solutions; Chaotic dynamics (search for similar items in EconPapers)
JEL-codes: C61 O41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (8)

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Working Paper: Cycles and chaos in the one-sector growth model with elastic labor supply (2015)
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DOI: 10.1007/s00199-016-1005-0

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