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In this paper we study a two-sector optimal growth model with elastic labor supply. We provide a complete characterization of the production possibility frontier in terms of the capital intensity difference accross sectors. We show that the modified golden rule is saddle-point stable when the investment good is capital intensive. On the other hand, to(More)
We consider a two-sector economy with positive intersectoral external effects and nonincreasing social returns. We show that if the discount factor r is close to 1 then local indeterminacy may be obtained with mild market imperfections. Moreover, with additional conditions, when r is made smaller the steady state becomes totally unstable and quasi-periodic(More)
We address the issue of optimal growth when standard-of-living aspirations are transmitted from one generation to the next. We derive the condition for the optimal solution to be stable in the saddle-point sense and show that this optimal solution may display damped oscillations even when the planner does not discount the utility of future generations(More)
In this paper, we consider an aggregate overlapping generations model with endogenous labor, consumption in both periods of life, homothetic preferences and productive external effects coming from the average capital and labor. We show that under realistic calibrations of the parameters, in particular a large enough share of first period consumption over(More)
We explore the link between wealth inequality and macroeconomic volatility in a two-sector neoclassical growth model with heterogeneous agents. The model has a unique aggregate steady state which is independent of the level of inequality. However, whenever preferences do not exhibit hyperbolic absolute risk aversion, wealth heterogeneity may affect the(More)
the Université de la Méditerranée (GREQAM-IDEP) and a visiting fellow at the Economics Department of UCLA, whose hospitalities are gratefully acknowledged. This is a shortened version of a GREQAM working paper titled Are Progressive Fiscal Rules Stabilizing?. 1 2 Abstract We assess the stabilizing effect of progressive income taxes in a monetary economy(More)
It is well known from the literature that the introduction of liquidity constraints in in...nite-horizon economies may be responsible for the occurrence of local indeterminacy and sunspot ‡uctuations. Yet, the question of the robustness of such phenomena when the constraints are progressively relaxed, and the possibility of intertemporal arbitrage on the(More)
We study the determinacy of perfect foresight equilibrium near a steady state in an overlapping generations model with production and both altruistic and non altruistic agents having distinct utility functions. The proportions of each type of consumers are exogenously given. Our main results show that when there are positive stationary bequests, some(More)