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Relational consumption and nonlinear dynamics in an overlapping generations model

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  • Antoci, Angelo

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Sodini, Mauro

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Zarri, Luca

    ()
    (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

Abstract

In this paper, we show that incorporating the relational dimension into an otherwise standard OLG model and focusing on dynamic leisure externalities leads to dramatically different predictions. Here we show that when the old perceive private and relational consumption as substitutable goods, a series of interesting dynamic outcomes – such as local indeterminacy, non-linear phenomena (including chaotic dynamics) and even multiple equilibria with global indeterminacy – may arise. We also draw some welfare implications and relate them to the well-known “happiness paradox” arising within contemporary affluent societies.

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Bibliographic Info

Paper provided by Associazione Italiana per la Cultura della Cooperazione e del Non Profit in its series AICCON Working Papers with number 103-2012.

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Length: 26 pages
Date of creation: 19 Mar 2012
Date of revision:
Handle: RePEc:ris:aiccon:2012_103

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Keywords: overlapping generations framework; growth; leisure; relational goods; happiness paradox;

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  1. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2004. "Social capital accumulation and the evolution of social partecipation," AICCON Working Papers 5-2004, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  2. Duranton, Gilles, 2001. "Endogenous labor supply, growth and overlapping generations," Journal of Economic Behavior & Organization, Elsevier, vol. 44(3), pages 295-314, March.
  3. Gomes, Orlando, 2006. "Can social interaction contribute to explain business cycles?," MPRA Paper 2848, University Library of Munich, Germany.
  4. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2012. "The Solaria syndrome: Social capital in a growing hyper-technological economy," Journal of Economic Behavior & Organization, Elsevier, vol. 81(3), pages 802-814.
  5. Mihaela Pintea, 2006. "Leisure Externalities: Implications for Growth and Welfare," Working Papers 0609, Florida International University, Department of Economics.
  6. Antoci, Angelo & Sabatini, Fabio & Sodini, Mauro, 2009. "The fragility of social capital," AICCON Working Papers 59-2009, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  7. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," MPRA Paper 13750, University Library of Munich, Germany.
  8. Gomez Suarez, Manuel A., 2008. "Utility and production externalities, equilibrium efficiency and leisure specification," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1496-1519, December.
  9. 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.
  10. Hamermesh, Daniel S., 2000. "Timing, Togetherness and Time Windfalls," IZA Discussion Papers 173, Institute for the Study of Labor (IZA).
  11. Antoci Angelo & Sabatini Fabio & Sodini Mauro, 2011. "See you on Facebook! A framework for analyzing the role of computer-mediated interaction in the evolution of social capital," wp.comunite 0072, Department of Communication, University of Teramo.
  12. Graham, Liam & Oswald, Andrew J., 2010. "Hedonic capital, adaptation and resilience," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 372-384, November.
  13. Junxi Zhang, 1999. "Environmental sustainability, nonlinear dynamics and chaos," Economic Theory, Springer, vol. 14(2), pages 489-500.
  14. Stefano Bartolini & Ennio Bilancini & Maurizio Pugno, 2008. "Did the Decline in Social Capital Depress Americans’ Happiness?," Department of Economics University of Siena 540, Department of Economics, University of Siena.
  15. Bartolini, Stefano & Bonatti, Luigi, 2007. "Endogenous growth, decline in social capital and expansion of market activities," MPRA Paper 3341, University Library of Munich, Germany.
  16. John, A & Pecchenino, R, 1994. "An Overlapping Generations Model of Growth and the Environment," Economic Journal, Royal Economic Society, vol. 104(427), pages 1393-1410, November.
  17. Jennifer Hunt, 1998. "Hours Reductions as Work-Sharing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 339-381.
  18. Simone Borghesi & Alessandro Vercelli, 2012. "Happiness And Health: Two Paradoxes," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 203-233, 04.
  19. Bilancini, Ennio & D'Alessandro, Simone, 2012. "Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth," Ecological Economics, Elsevier, vol. 84(C), pages 194-205.
  20. Dora L. Costa & Matthew E. Kahn, 2003. "Understanding the American Decline in Social Capital, 1952--1998," Kyklos, Wiley Blackwell, vol. 56(1), pages 17-46, February.
  21. Bartolini, Stefano & Bonatti, Luigi, 2008. "Endogenous growth, decline in social capital and expansion of market activities," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 917-926, September.
  22. Leonardo Becchetti & Alessandra Pelloni & Fiammetta Rossetti, 2008. "Relational Goods, Sociability, and Happiness," Kyklos, Wiley Blackwell, vol. 61(3), pages 343-363, 08.
  23. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2008. "Participation, growth and social poverty: social capital in a homogeneous society," MPRA Paper 13661, University Library of Munich, Germany.
  24. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
  25. Bruni, Luigino & Stanca, Luca, 2008. "Watching alone: Relational goods, television and happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 506-528, March.
  26. de Vilder, Robin, 1996. "Complicated Endogenous Business Cycles under Gross Substitutability," Journal of Economic Theory, Elsevier, vol. 71(2), pages 416-442, November.
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