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A Two-sector Overlapping Generations Model with Endogenous Discounting

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  • Carine Nourry
  • Alena Sergeeva
  • Alain Venditti

Abstract

In this paper, we consider a two-sector two-periods overlapping generations model with inelastic labor, consumption in both periods of life, endogenous discounting and homothetic preferences. We prove that under the assumption of under-accumulation of capital, an economy with endogenous discounting depending on income is much more likely to experience macroeconomic fluctuations compared to an economy with constant discounting.

Suggested Citation

  • Carine Nourry & Alena Sergeeva & Alain Venditti, 2011. "A Two-sector Overlapping Generations Model with Endogenous Discounting," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 18(3), pages 359-385.
    • Handle: RePEc:taf:raaexx:v:18:y:2011:i:3:p:359-385
    DOI: 10.1080/16081625.2011.9720888
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    References listed on IDEAS

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    1. Nourry, Carine & Venditti, Alain, 2011. "Local indeterminacy under dynamic efficiency in a two-sector overlapping generations economy," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 164-169, March.
    2. Baxter, Marianne, 1996. "Are Consumer Durables Important for Business Cycles?," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 147-155, February.
    3. Jess Benhabib & Kazuo Nishimura, 2012. "Competitive Equilibrium Cycles," Springer Books, in: John Stachurski & Alain Venditti & Makoto Yano (ed.), Nonlinear Dynamics in Equilibrium Models, edition 127, chapter 0, pages 75-96, Springer.
    4. Paul A. Samuelson, 1937. "A Note on Measurement of Utility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 4(2), pages 155-161.
    5. Epstein, Larry G., 1987. "A simple dynamic general equilibrium model," Journal of Economic Theory, Elsevier, vol. 41(1), pages 68-95, February.
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    Cited by:

    1. de la Croix, David & Doepke, Matthias, 2021. "A soul’s view of the optimal population problem," Mathematical Social Sciences, Elsevier, vol. 112(C), pages 98-108.

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