Endogenous Fluctuations and Public Services in a Simple OLG Economy

Thomas Seegmuller

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Abstract: In a simple OLG model, we introduce public services which work as a source of utility. Assuming constant returns to scale in production, we show that public services promote the occurrence of local indeterminacy. In contrast to a lot of existing contributions which have exploited productive externalities, this paper establishes that the existence of externalities in the utility function can explain the emergence of endogenous fluctuations.

Keywords: Endogenous fluctuations; public spending; externalities in preferences (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (7)

Published in Economics Bulletin, 2003, 5 (10), pp.1-7

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00194108

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