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Utility and production externalities, equilibrium efficiency and leisure specification

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  • Gomez Suarez, Manuel A.

Abstract

This paper analyzes the implications that the specification of the leisure activity has on the equilibrium efficiency in a two-sector endogenous growth model with human capital accumulation. We consider external effects of consumption and leisure in utility, and sector-specific externalities associated to physical and human capital in production. The optimal tax policy to correct for the distortions caused by the externalities is characterized under all the typical leisure specifications considered in the literature: home production, quality time and raw time. We show that the optimal policy depends markedly on the leisure specification.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 30 (2008)
Issue (Month): 4 (December)
Pages: 1496-1519

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Handle: RePEc:eee:jmacro:v:30:y:2008:i:4:p:1496-1519
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

Keywords: Endogenous growth Optimal policy Externalities Leisure;

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Cited by:

  1. Angelo Antoci & Mauro Sodini & Luca Zarri, 2012. "Relational Consumption and Nonlinear Dynamics in an Overlapping Generations Model," Working Papers 13/2012, University of Verona, Department of Economics.

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