Can Heterogeneous Preferences Stabilize Endogenous Fluctuations?
AbstractWhile most of the literature concerned with indeterminacy considers a representative agent, some recent works have investigated the role of heterogenous agents on dynamics. This paper adds a contribution to the debate, stressing the effects of heterogeneity in consumers’ preferences within an overlapping generations economy with capital accumulation and consumption in both periods. We show that such an heterogeneity can stabilize fluctuations in many cases, by simply reducing the range of parameters compatible with indeterminacy.
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Bibliographic InfoPaper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 05-09.
Length: 24 pages
Date of creation: 2005
Date of revision:
Endogenous fluctuations; heterogeneous preferences; overlapping generations;
Find related papers by JEL classification:
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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