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Can consumption spillovers be a source of equilibrium indeterminacy?

Jaime Alonso-Carrera (), Jordi Caballe () and Xavier Raurich ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: In this paper, we show that consumption externalities are a source of equilibrium indeterminacy in a growth model with endogenous labor supply. In particular, when the marginal rate of substitution between own consumption and the others' consumption is constant along the equilibrium path, the equilibrium does not exhibit indeterminacy. In contrast, when that marginal rate of substitution is not constant, the equilibrium may exhibit indeterminacy even if the elasticity of the labor demand is smaller than the elasticity of the Frisch labor supply.

Keywords: Consumption externalities; equilibrium efficiency; indeterminacy (search for similar items in EconPapers)
JEL-codes: D91 E62 O40 (search for similar items in EconPapers)
Pages: 22
Date: 2005-01-12
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Related works:
Journal Article: Can consumption spillovers be a source of equilibrium indeterminacy? (2008) Downloads
Working Paper: CAN CONSUMPTION SPILLOVERS BE A SOURCE OF EQUILIBRIUM INDETERMINACY? (2007) Downloads
Working Paper: Can consumption spillovers be a source of equilibrium indeterminacy? (2005) Downloads
Working Paper: Can consumption spillovers be a source of equilibrium indeterminacy? (2005)
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