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Animal Spirits in Woodford and Reichlin Economies: The Representative Agent Does Matter

Author

Listed:
  • Stefano Bosi

    (EPEE, Université d’Evry)

  • Thomas Seegmuller

    (CNRS and EUREQua)

Abstract

Macroeconomic dynamic models are often criticized because the households’ behavior is summarized by a representative agent and, then, they do not take into account consumers’ heterogeneity. Reconsidering the Woodford (1986) infinite-horizon model and the Reichlin (1986) OLG model, we show that the representative agent can be a good representation of heterogeneity in preferences, in order to study the local dynamics and the occurrence of endogenous fluctuations.

Suggested Citation

  • Stefano Bosi & Thomas Seegmuller, 2005. "Animal Spirits in Woodford and Reichlin Economies: The Representative Agent Does Matter," Documents de recherche 05-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    • Handle: RePEc:eve:wpaper:05-01
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    References listed on IDEAS

    as
    1. Ghiglino, Christian, 2005. "Wealth inequality and dynamic stability," Journal of Economic Theory, Elsevier, vol. 124(1), pages 106-115, September.
    2. Reichlin, Pietro, 1986. "Equilibrium cycles in an overlapping generations economy with production," Journal of Economic Theory, Elsevier, vol. 40(1), pages 89-102, October.
    3. Cazzavillan, Guido, 2001. "Indeterminacy and Endogenous Fluctuations with Arbitrarily Small Externalities," Journal of Economic Theory, Elsevier, vol. 101(1), pages 133-157, November.
    4. 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.
    5. Woodford, Michael, 1986. "Stationary sunspot equilibria in a finance constrained economy," Journal of Economic Theory, Elsevier, vol. 40(1), pages 128-137, October.
    6. Fabrice Gilles, 2004. "An Attempt to Evaluate the Impact of Reorganization on the Way Working Time Reduction Has Been Implemented by French Firms since 1996," Documents de recherche 04-19, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
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    Cited by:

    1. Bosi, Stefano & Seegmuller, Thomas, 2008. "Can heterogeneous preferences stabilize endogenous fluctuations," Journal of Economic Dynamics and Control, Elsevier, vol. 32(2), pages 624-647, February.

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    More about this item

    Keywords

    Endogenous fluctuations; heterogeneous preferences; representative agent;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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