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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)
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)
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)
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)
two anonymous referees and an Associate Editor for useful comments and suggestions. Abstract: We explore the link between wealth inequality, preference heterogeneity and macroeconomic volatility in a two-sector neoclassical growth model. First we prove that, if agents have homogeneous preferences, when the absolute risk tolerance is a strictly convex(More)
We consider a one-sector Ramsey-type growth model with inelastic labor and learning-by-doing externalities based on cumulative gross investment (cumulative production of capital goods), which is assumed, in accordance with Arrow [5], to be a good index of experience. We prove that a slight memory effect characterizing the learning-by-doing process is enough(More)
seminar and conference participants at various places for helpful discussions. The usual disclaimer applies. Abstract Firms devote significant resources to maintain and repair their existing capital. Within a real business cycle model featuring arguably small aggregate increasing returns, this paper assesses the stabilizing effects of fiscal policies with a(More)