Intertemporal Preferences, Distributive Shares, and Local Dynamics
This paper provides a simplified version of the perfectly flexible wages OLG model proposed by Hahn and Solow (1995). Using a Cobb-Douglas specification for the utility and the production functions, we demonstrate that the local stability of the steady-state equilibrium depends only on intertemporal preferences and distributive shares. Furthermore, we show that local stability might be related to consumption smoothing considerations.
|Date of creation:||01 Jan 2004|
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