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

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  • d'Albis, Hippolyte
  • Augeraud-Véron, Emmanuelle
  • Venditti, Alain

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 LERNA, University of Toulouse in its series LERNA Working Papers with number 10.13.319.

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Date of creation: Jul 2010
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Handle: RePEc:ler:wpaper:10.13.319

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  2. Susanto Basu & John G. Fernald, 1996. "Returns to scale in U.S. production: estimates and implications," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 546, Board of Governors of the Federal Reserve System (U.S.).
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  20. d'Albis, Hippolyte & Le Van, Cuong, 2006. "Existence of a competitive equilibrium in the Lucas (1988) model without physical capital," Journal of Mathematical Economics, Elsevier, vol. 42(1), pages 46-55, February.
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Citations

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Cited by:
  1. 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.
  2. 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.
  3. repec:hal:journl:halshs-00786419 is not listed on IDEAS
  4. Giorgio Fabbri & Salvatore Federico, 2014. "On the infinite-dimensional representation of stochastic controlled systems with delayed control in the diffusion term," Working Papers hal-01038088, HAL.
  5. repec:hal:journl:halshs-00721289 is not listed on IDEAS

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