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Indeterminacy and nonlinear dynamics in an OLG growth model with endogenous labour supply and inherited tastes

  • Luca Gori

    ()

  • Mauro Sodini

    ()

This study analyses the dynamics of a two-dimensional overlapping generations economy with endogenous labour supply à la Reichlin (J Econ Theory 40(1):89–102, 1986 ) and aspirations. We show that the degree of nonlinearity of consumption externality in individual utility is responsible for the existence of either one steady state or two steady states. In addition, some interesting global dynamic properties, such as cyclical behaviour and/or global indeterminacy, emerge depending on the relative importance of aspirations in utility. Copyright Springer-Verlag Italia 2014

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File URL: http://hdl.handle.net/10.1007/s10203-013-0146-x
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Article provided by Springer & Associazione per la Matematica in its journal Decisions in Economics and Finance.

Volume (Year): 37 (2014)
Issue (Month): 1 (April)
Pages: 159-179

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Handle: RePEc:spr:decfin:v:37:y:2014:i:1:p:159-179
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