Thomas Seegmuller () (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - CNRS : UMR8594 - Université Panthéon-Sorbonne - Paris I)
Abstract
Endogenous cycles cannot emerge in one-sector monetary overlapping generations models when there is intertemporal substitutability,even if returns to scale are increasing. In this article, we show that the conclusions are different when there are two sectors. Considering a two-sector monetary overlapping generations economy, we assume that in each sector, households consume the two goodsproduced in the economy and firms produce one final good under an internal constant returns to scale technology. However, returns to scale are increasing at the social level because there are sectorspecific externalities. In this framework, we show that endogenous cycles can occur when households prefer to consume the good produced in the other sector. This result is essentially due tothe fact that aggregate consumption in each sector highly depends on the price of the good produced in the other sector. Moreover, we can notice that it does not depend on the substitutability orcomplementarity between the two goods.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Length: Date of creation: 2004 Date of revision: Publication status: Published, Annales d'Economie et Statistiques, 2004, 74, 131-146 Handle: RePEc:hal:cesptp:halshs-00194160_v1
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00194160/en/ Contact details of provider: Web page: http://hal.archives-ouvertes.fr/
For technical questions regarding this item, or to correct its listing, contact: (CCSD).
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: