Endogenous Cycles in a Two-sector Overlapping Generations Model under Intertemporal Substitutability

Thomas Seegmuller

Post-Print from HAL

Abstract: Endogenous cycles cannot emerge in one-sector monetary overlapping generations models when there is intertemporal substitutability,even if returns to scale are increasing. In this article, we show that the conclusions are different when there are two sectors. Considering a two-sector monetary overlapping generations economy, we assume that in each sector, households consume the two goodsproduced in the economy and firms produce one final good under an internal constant returns to scale technology. However, returns to scale are increasing at the social level because there are sectorspecific externalities. In this framework, we show that endogenous cycles can occur when households prefer to consume the good produced in the other sector. This result is essentially due tothe fact that aggregate consumption in each sector highly depends on the price of the good produced in the other sector. Moreover, we can notice that it does not depend on the substitutability orcomplementarity between the two goods.

Keywords: Endogenous fluctuations; two-sector economy; intertemporal substitutability; increasing returns to scale (search for similar items in EconPapers)
Date: 2004
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00194160
References: Add references at CitEc
Citations:

Published in Annales d'Economie et de Statistique, 2004, 74, pp.131-146

Downloads: (external link)
https://shs.hal.science/halshs-00194160/document (application/pdf)

Related works:
Journal Article: Endogenous Cycles in aTwo-sector Overlapping Generations Model under Intertemporal Substitutability (2004)
Working Paper: Endogenous Cycles in a Two-sector Overlapping Generations Model under Intertemporal Substitutability (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00194160

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().