Indeterminacy and expectation-driven uctuations with non-separable preferences

Kazuo Nishimura and Alain Venditti

No 702, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: We consider a continuous-time two-sector infinite-horizon model with sector specific externalities, endogenous labor and a concave homogeneous non-separable utility function. We show that local indeterminacy arises with a low elasticity of intertempo- ral substitution in consumption provided the wage elasticity of the labor supply and the elasticity of substitution between consumption and leisure are low enough. Such a result cannot hold with additively-separable preferences for which local indeterminacy requires a large enough elasticity of intertemporal substitution in consumption.

Keywords: Sector-specific externalities; endogenous labor; non-separable concave ho- mogeneous utility functions; intertemporal substitution in consumption; local indetermi- nacy. (search for similar items in EconPapers)
JEL-codes: C62 E32 O41 (search for similar items in EconPapers)
Pages: 27pages
Date: 2010-03
New Economics Papers: this item is included in nep-dge and nep-upt
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.kier.kyoto-u.ac.jp/DP/DP702.pdf (application/pdf)

Related works:
Journal Article: Indeterminacy and expectation-driven fluctuations with non-separable preferences (2010)
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:kyo:wpaper:702

Access Statistics for this paper

More papers in KIER Working Papers from Kyoto University, Institute of Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Makoto Watanabe ().