IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Consumption Externalities in a Ramsey Model

  • Riham Barbar

    ()

    (EPEE, University of Evry Val d'Essonne)

  • Jean-Paul Barinci

    ()

    (EPEE, University of Evry Val d'Essonne)

This chapter studies the e¤ect of consumption externalities on stability properties of a Ramsey model with heterogeneous agents and borrowing constraints. Agents di¤er in their initial wealth, felicity functions and discount factors. For simplicity, heterogeneity is reduced to two groups. Agents are identical within each group. In order to capture the role of heterogeneity as well as external e¤ects, we introduce intergroup and in- tragroup consumption externalities. In this setting, we show that the most patient agent holds the entire capital stock at the steady-state whereas the other agent (impatient) consumes his wage-income. Our main result is that, whenever the preferences display keeping up with the Joneses feature with respect to intergroup externalities, the appearance of two-period cy- cles does not require the relaxation of Income Monotonicity Assumption. Instead, only the external e¤ects in consumption from the other group that plays a crucial role for the appearance of these cycles.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://epee.univ-evry.fr/RePEc/2010/10-11.pdf
Download Restriction: no

Paper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 10-11.

as
in new window

Length: 24 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:eve:wpaper:10-11
Contact details of provider: Postal: 4, bld Francois Mitterand, 91025 Evry Cedex
Phone: +33 1 69 47 71 77
Fax: +33 1 69 47 70 50
Web page: http://epee.univ-evry.fr

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eve:wpaper:10-11. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Samuel Nosel)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.