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On the Ramsey Equilibrium with heterogeneous consumers and endogenous labor supply

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  • Stefano Bosi

    ()
    (EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies - Université Lille II - Droit et santé - Université Lille III - Sciences humaines et sociales - PRES Université Lille Nord de France, EPEE - Université d'Evry-Val d'Essonne)

  • Thomas Seegmuller

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

Abstract

In this paper, we address the stability issue, stressing the role of labor supply, in a Ramsey model with heterogeneous households subject to borrowing constraints. Making labor supply endogenous leads us to prove the existence of two kinds of steady state : the one where everybody supplies labor, the other where only the most patient agent refrains from working. Focusing on the latter and going beyond models with inelastic labor supply, we show how preferences of impatient agents affect the saddle-path stability and the occurence of endogenous cycles. When their elasticity of intertemporal substitution in consumption exceeds one, instability and cycles are less likely, requiring lower degrees of capital- labor substitution. Conversely, elasticity values below one promote the emergence of fluctuations.

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Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00143421.

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Date of creation: Jun 2007
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Handle: RePEc:hal:cesptp:halshs-00143421

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Related research

Keywords: Saddle-path stability; endogenous cycles; heterogeneous agents; endogenous labor supply; borrowing constraint.;

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References

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  1. Sorger, Gerhard, 1994. "On the Structure of Ramsey Equilibrium: Cycles, Indeterminacy, and Sunspots," Economic Theory, Springer, Springer, vol. 4(5), pages 745-64, August.
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  14. Becker, Robert A. & Foias, Ciprian, 1987. "A characterization of Ramsey equilibrium," Journal of Economic Theory, Elsevier, Elsevier, vol. 41(1), pages 173-184, February.
  15. Jean-Philippe Garnier & Kazuo Nishimura & Alain Venditti, 2007. "Intertemporal Substitution In Consumption, Labor Supply Elasticity And Sunspot Fluctuations In Continuous-Time Models," Working Papers, HAL halshs-00352367, HAL.
  16. Cuong Le Van & Manh-Hung Nguyen & Yiannis Vailakis, 2005. "Equilibrium dynamics in an aggregative model of capital accumulation with heterogeneous agents and elastic labor," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00197560, HAL.
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Citations

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Cited by:
  1. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On existence, effciency and bubbles of Ramsey equilibrium with borrowing constraints," Working Papers, Development and Policies Research Center (DEPOCEN), Vietnam 15, Development and Policies Research Center (DEPOCEN), Vietnam.
  2. Kazuo Nishimura & Carine Nourry & Thomas Seegmuller & Alain Venditti, 2014. "On the (de)Stabilizing Effect of Public Debt In a Ramsey Model with Heterogeneous Agents," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University DP2014-03, Research Institute for Economics & Business Administration, Kobe University.
  3. repec:hal:journl:halshs-00331299 is not listed on IDEAS
  4. Kazuo Nishimura & Carine Nourry & Thomas Seegmuller & Alain Venditti, 2013. "Public Spending as a Source of Endogenous Business Cycles in a Ramsey Model with Many Agents," Working Papers, HAL halshs-00796698, HAL.
  5. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On Existence and Bubbles of Ramsey Equilibrium with Borrowing Constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-00793530, HAL.
  6. repec:hal:psewpa:halshs-00793530 is not listed on IDEAS
  7. repec:ipg:wpaper:4 is not listed on IDEAS
  8. Stefano Bosi & Thomas Seegmuller, 2008. "On the role of progressive taxation in a Ramsey Model with heterogeneous households," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne v08051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  9. repec:ipg:wpaper:201404 is not listed on IDEAS
  10. Stefano Bosi & Cuong Le Van, 2011. "On the existence of a Ramsey equilibrium with endogenous labor supply and borrowing constraints," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 11045, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  11. repec:hal:journl:halshs-00612131 is not listed on IDEAS
  12. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2014. "On existence and bubbles of Ramsey equilibrium with borrowing constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL halshs-01020635, HAL.
  13. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2013. "On Existence and Bubbles of Ramsey Equilibrium with Borrowing Constraints," Working Papers, HAL halshs-00793530, HAL.
  14. Robert Becker & Stefano Bosi & Cuong Le Van & Thomas Seegmuller, 2014. "On existence and bubbles of Ramsey equilibrium with borrowing constraints," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 14040, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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