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Relational consumption and nonlinear dynamics in an overlapping generations model

  • Angelo Antoci

    ()

  • Mauro Sodini

    ()

  • Luca Zarri

    ()

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, nonlinear 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. Copyright Springer-Verlag Italia 2014

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File URL: http://hdl.handle.net/10.1007/s10203-013-0147-9
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Article provided by Springer in its journal Decisions in Economics and Finance.

Volume (Year): 37 (2014)
Issue (Month): 1 (April)
Pages: 137-158

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Handle: RePEc:spr:decfin:v:37:y:2014:i:1:p:137-158
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  18. 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.
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  27. 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.
  28. Pintea, Mihaela I., 2010. "Leisure externalities: Implications for growth and welfare," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1025-1040, December.
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