Can heterogeneous preferences stabilize endogenous fluctuations?

Stefano Bosi () and Thomas Seegmuller ()
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Stefano Bosi: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne, 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
Thomas Seegmuller: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: While most of the literature concerned with indeterminacy and endogenous cycles is based on the restrictive assumption of a representative consumer,some recent contributions have investigated the role of heterogeneous agents in dynamics. This paper adds to this latter strand of the literature by highlighting the effects of heterogeneity in consumers' preferences within an overlapping generations economy with capital accumulation, endogenous labor supply and consumption in both periods. Using a mean-preserving approach to heterogeneity, we show that increasing the dispersion of propensity to save decreases macroeconomic volatility, by narrowing down the range of parameter values compatible with indeterminacy and ruling out expectations-driven fluctuations under a sufficiently large heterogeneity.

Keywords: Endogenous fluctuations; heterogeneous preferences; mean-preserving dispersion; overlapping generations.; overlapping generations (search for similar items in EconPapers)
Date: 2008-02
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00266713v1
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Citations: View citations in EconPapers (4)

Published in Journal of Economic Dynamics and Control, 2008, 32 (2), pp.624-647. ⟨10.1016/j.jedc.2007.03.002⟩

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Related works:
Journal Article: Can heterogeneous preferences stabilize endogenous fluctuations (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2008)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2006)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2006)
Working Paper: Can heterogeneous preferences stabilize endogenous fluctuations? (2006)
Working Paper: Can Heterogeneous Preferences Stabilize Endogenous Fluctuations? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-00266713

DOI: 10.1016/j.jedc.2007.03.002

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