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Can heterogeneous preferences stabilize endogenous fluctuations ? Author info | Abstract | Publisher info | Download info | Related research | Statistics Stefano Bosi () (EQUIPPE et EPEE)
Thomas Seegmuller () (Centre d'Economie de la Sorbonne )
While most of the literature concerned with indeterminacy and endogenous cycles is based on the questionable assumption of a representative consumer, some recent works have investigated the role of heterogeneous agents on dynamics. This paper adds a contribution to the debate, highlighting the effects of heterogeneity in consumers' preferences within an overlapping generations economy with capital accumulation, endogenous labor supply and consumption in both periods. Using a mean-preserving approach to heterogeneity, we show that increasing the dispersion of propensities to save turns out to stabilize the macroeconomic volatility, by reducing the range of parameters compatible with indeterminacy and ruling out expectations-driven fluctuations under a sufficiently large heterogeneity.
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Paper provided by Université Panthéon-Sorbonne (Paris 1) in its series Cahiers de la Maison des Sciences Economiques with number
v06082.
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Length: 28 pages
Date of creation: Dec 2006Date of revision:
Handle: RePEc:mse:wpsorb:v06082Contact details of provider: Postal: 106 - 112 boulevard de l'H�pital, 75647 Paris cedex 13 Phone: 01 44 07 81 00 Fax: 01 44 07 81 09 Email: Web page: http://mse.univ-paris1.fr/ More information through EDIRC
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Keywords: Endogenous fluctuations ; heterogeneous preferences ; mean-preserving dispersion ; overlapping generations. ; Find related papers by JEL classification: C62 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Existence and Stability Conditions of Equilibrium E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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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.: Ghiglino, Christian & Venditti, Alain, 2007.
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