Efficient Endogenous Fluctuations in Two-Sector OLG Model

Antoine Le Riche (), Carine Nourry and Alain Venditti
Additional contact information
Antoine Le Riche: Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS

No 1242, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We consider a two-sector two-good two-periods overlapping generations model with inelastic labor, consumption in both period of life and homothetic CES preferences. There are two consumption goods, one pure(non-durable)consumption and one consumable (durable) capital good which can be either consumed or invested. Assuming gross substitutability and a capital intensive pure consumption good, we prove the existence of efficient endogenous fluctuations through a Hopf bifurcation if the share of the consumption of young in the composite good is low enough. We also show that some fiscal policy rules can improve welfare and prevent the existence of business-cycle fluctuations in the economy by driving it to the optimal steady state as soon as it is announced.

Keywords: Two-sector OLG model; multiple consumption goods; dynamic efficiency; endogenous fluctuations. (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-12, Revised 2012-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.amse-aixmarseille.fr/sites/default/files/_dt/2012/wp_2012_-_nr_42.pdf (application/pdf)

Related works:
Working Paper: Efficient Endogenous Fluctuations in Two-Sector OLG Model (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1242

Access Statistics for this paper

More papers in AMSE Working Papers from Aix-Marseille School of Economics, France AMU-AMSE - 5-9 Boulevard Maurice Bourdet, CS 50498 - 13205 Marseille Cedex 1. Contact information at EDIRC.
Bibliographic data for series maintained by Gregory Cornu ().