CAN CONSUMPTION SPILLOVERS BE A SOURCE OF EQUILIBRIUM INDETERMINACY?

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

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

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.

JEL-codes: D91 E62 O40 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2007-07
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Can consumption spillovers be a source of equilibrium indeterminacy? (2015)
Journal Article: Can consumption spillovers be a source of equilibrium indeterminacy? (2008)
Working Paper: Can consumption spillovers be a source of equilibrium indeterminacy? (2005)
Working Paper: Can consumption spillovers be a source of equilibrium indeterminacy? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2007-13

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