Non‐separable Utilities and Aggregate Instability

Been-Lon Chen, Shun‐Fa Lee () and Xavier Raurich
Additional contact information
Shun‐Fa Lee: Department of Industrial Economics, Tamkang University, http://www.ie.tku.edu.tw/main.php

No 18-A002, IEAS Working Paper : academic research from Institute of Economics, Academia Sinica, Taipei, Taiwan

Abstract: This paper studies an infinite‐horizon two‐sector growth model with sector‐specific externalities and preferences that are non‐separable between consumption and leisure. We find two main results. First, a larger income effect on the labor supply increases the possibility of macroeconomic instability. Second, a larger elasticity of the labor supply may increase or decrease the possibility of aggregate instability, depending on the intensity of the income effect.

Keywords: : Indeterminacy; non‐separable preferences; income effect; labor supply elasticity (search for similar items in EconPapers)
JEL-codes: E3 O41 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2018-01
New Economics Papers: this item is included in nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Non‐separable utilities and aggregate instability (2020)
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