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Business cycle fluctuations and learning-by-doing externalities in a one-sector model

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  • Hippolyte D'Albis

    ()
    (LERNA - Economie des Ressources Naturelles - INRA : UR1081 - CEA : DPG - Université des Sciences Sociales - Toulouse I)

  • Emmanuelle Augeraud-Véron

    ()
    (MIA - Mathématiques, Image et Applications - Université de La Rochelle : EA3165)

  • Alain Venditti

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

Abstract

We consider a one-sector Ramsey-type growth model with inelastic labor and learning-by-doing externalities based on cumulative gross investment (cumulative production of capital goods), which is assumed, in accordance with Arrow [5], to be a good index of experience. We prove that a slight memory effect characterizing the learning-by-doing process is enough to generate business cycle fluctuations through a Hopf bifurcation. This is obtained for reasonable parameter values, notably for both the elasticity of output with respect to the externality and the elasticity of intertemporal substitution. Hence, contrary to all the results available in the literature on aggregate models, we show that endogenous fluctuations are compatible with a low (in actual fact, zero) wage elasticity of the labor supply.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00432267.

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Date of creation: 15 Nov 2009
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Handle: RePEc:hal:wpaper:halshs-00432267

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Keywords: One-sector infinite-horizon model; learning-by-doing externalities; inelastic labor; business cycle fluctuations; Hopf bifurcation;

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Cited by:
  1. repec:hal:journl:halshs-00786419 is not listed on IDEAS
  2. Hippolyte D'Albis & Emmanuelle Augeraud-Véron & Hermen Jan Hupkes, 2013. "Multiple Solutions in Systems of Functional Differential Equations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00786419, HAL.
  3. Hippolyte d'Albis & Emmanuelle Augeraud-Véron & Hermen Jan Hupkes, 2012. "Backward- versus Forward-Looking Feedback Interest Rate Rules," Documents de travail du Centre d'Economie de la Sorbonne 12051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  4. repec:hal:journl:halshs-00721289 is not listed on IDEAS

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