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Business cycle fluctuations and learning-by-doing externalities in a one-sector model

Hippolyte d'Albis (), Emmanuelle Augeraud-Véron () and Alain Venditti ()

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Abstract: We consider a one-sector Ramsey-type growth model with inelastic labor and learning-by-doing externalities based on cumulative gross investment (cumulative production of capital goods), which is assumed, in accordance with Arrow [5], to be a good index of experience. We prove that a slight memory effect characterizing the learning-by-doing process is enough to generate business cycle fluctuations through a Hopf bifurcation. This is obtained for reasonable parameter values, notably for both the elasticity of output with respect to the externality and the elasticity of intertemporal substitution. Hence, contrary to all the results available in the literature on aggregate models, we show that endogenous fluctuations are compatible with a low (in actual fact, zero) wage elasticity of the labor supply.

Keywords: One-sector infinite-horizon model; learning-by-doing externalities; inelastic labor; business cycle fluctuations; Hopf bifurcation (search for similar items in EconPapers)
Date: 2009-11-15
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00432267
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Related works:
Journal Article: Business cycle fluctuations and learning-by-doing externalities in a one-sector model (2012) Downloads
Working Paper: Business Cycle Fluctuations and Learning-by-doing Externalities in a One-sector Model (2012)
Working Paper: Business cycle fluctuations and learning-by-doing externalities in a one-sector model (2012) Downloads
Working Paper: Business cycle fluctuations and learning-by-doing externalities in a one-sector model (2012) Downloads
Working Paper: Business cycle fluctuations and learning-by-doing externalities in a one-sector model (2010) Downloads
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