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Stability of equilibria in the overlapping generations model with endogenous labor supply

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  • Carine Nourry

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

Abstract

This paper looks at the issue of existence and stability of steady-state equilibria in an overlapping generations model with productive capital (a-la Diamond) augmented to include endogenous labor supply. The paper derives some necessary and sufficient conditions under which a steady-state equilibrium is a sink, a saddle point or a source. Under a simple condition on the labor supply elasticity, it is also shown that the local stability condition of the standard Diamond model can be generalized in order to become a necessary and sufficient condition for the saddle point property of the steady-state equilibrium. © 2001 Elsevier Science B.V.

Suggested Citation

  • Carine Nourry, 2001. "Stability of equilibria in the overlapping generations model with endogenous labor supply," Post-Print hal-02878016, HAL.
    • Handle: RePEc:hal:journl:hal-02878016
    DOI: 10.1016/S0165-1889(99)00067-6
    as

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    References listed on IDEAS

    as
    1. Oded Galor & Harl E. Ryder, 1988. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Working Papers 1988-07, Brown University, Department of Economics.
    2. Kehoe, Timothy J & Levine, David K, 1985. "Comparative Statics and Perfect Foresight in Infinite Horizon Economies," Econometrica, Econometric Society, vol. 53(2), pages 433-453, March.
    3. Galor, Oded, 1992. "A Two-Sector Overlapping-Generations Model: A Global Characterization of the Dynamical System," Econometrica, Econometric Society, vol. 60(6), pages 1351-1386, November.
    4. Cass, David & Shell, Karl, 1983. "Do Sunspots Matter?," Journal of Political Economy, University of Chicago Press, vol. 91(2), pages 193-227, April.
    5. Grandmont, Jean-Michel & Pintus, Patrick & de Vilder, Robin, 1998. "Capital-Labor Substitution and Competitive Nonlinear Endogenous Business Cycles," Journal of Economic Theory, Elsevier, vol. 80(1), pages 14-59, May.
    6. Muller, Walter III & Woodford, Michael, 1988. "Determinacy of equilibrium in stationary economies with both finite and infinite lived consumers," Journal of Economic Theory, Elsevier, vol. 46(2), pages 255-290, December.
    7. de Vilder, Robin, 1996. "Complicated Endogenous Business Cycles under Gross Substitutability," Journal of Economic Theory, Elsevier, vol. 71(2), pages 416-442, November.
    8. repec:crs:wpaper:9728 is not listed on IDEAS
    9. Mirrlees, J. A., 1976. "Optimal tax theory : A synthesis," Journal of Public Economics, Elsevier, vol. 6(4), pages 327-358, November.
    10. Galor, Oded & Ryder, Harl E., 1989. "Existence, uniqueness, and stability of equilibrium in an overlapping-generations model with productive capital," Journal of Economic Theory, Elsevier, vol. 49(2), pages 360-375, December.
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    More about this item

    Keywords

    C62; Endogenous labor supply; Indeterminacy; O41; Overlapping generations; Perfect foresight; Stability;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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