Stability Properties in a Growth Model

Alessandra Pelloni and Robert Waldmann (robert.waldmann@gmail.com)

Economics Working Papers from European University Institute

Abstract: The inclusion of a labour/leisure choice in endogenous growth models has interesting and somewhat counter-intuitive effects. In existing one sector models, a condition for indeterminacy is that labour demand is upward-sloping, which is difficult to reconcile with the evidence. In this paper we give conditions for indeterminacy in a one sector model with decreasing returns to labour. We show that this requires that consumption and leisure are both highly intertemporally substitutable while the factors of production are highly complementary.

Keywords: CONSUMPTION; INTERTEMPORAL CHOICE (search for similar items in EconPapers)
JEL-codes: D91 (search for similar items in EconPapers)
Pages: 10 pages
Date: 1997
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Journal Article: Stability properties of a growth model (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:eui:euiwps:eco97/11

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