On the Ramsey Equilibrium with heterogeneous consumers and endogenous labor supply

Stefano Bosi () and Thomas Seegmuller ()
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Stefano Bosi: EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - PRES Université Lille Nord de France - Université de Lille, Droit et Santé, EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne
Thomas Seegmuller: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we address the stability issue, stressing the role of labor supply, in a Ramsey model with heterogeneous households subject to borrowing constraints. Making labor supply endogenous leads us to prove the existence of two kinds of steady state : the one where everybody supplies labor, the other where only the most patient agent refrains from working. Focusing on the latter and going beyond models with inelastic labor supply, we show how preferences of impatient agents affect the saddle-path stability and the occurence of endogenous cycles. When their elasticity of intertemporal substitution in consumption exceeds one, instability and cycles are less likely, requiring lower degrees of capital- labor substitution. Conversely, elasticity values below one promote the emergence of fluctuations.

Keywords: Saddle-path stability; endogenous cycles; heterogeneous agents; endogenous labor supply; borrowing constraint; Stabilité de point-selle; cycles endogènes; agents hétérogènes; offre de travail endogène; contrainte d'emprunt (search for similar items in EconPapers)
Date: 2007-06
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00143421v2
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Citations: View citations in EconPapers (3)

Published in 2007

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Related works:
Journal Article: On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply (2010)
Working Paper: On the Ramsey Equilibrium with heterogeneous consumers and endogenous labor supply (2007)
Working Paper: On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00143421

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