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On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

Author

Listed:
  • Stefano Bosi

    (EQUIPPE - Universit de Lille 1 et EPEE)

  • Thomas Seegmuller

    (Centre d'Economie de la Sorbonne)

Abstract

In this paper, we address the question of deterministic cycles in a Ramsey model with heterogeneous infinite-lived agents and borrowing constraints, augmented to take into account the case of elastic labor supply. Under usual restrictions, not only we show that the steady state is unique, but also we clarify its stability properties through a local analysis. We find that, in many cases, the introduction of elastic labor supply promotes convergence by widening the range of parameters for saddle-path stability and endogenous cycles can eventually disappear. These results are robustly illustrated by means of canonical examples in which consumers have separable, KPR or homogeneous preferences

Suggested Citation

  • Stefano Bosi & Thomas Seegmuller, 2007. "On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply," Documents de travail du Centre d'Economie de la Sorbonne v07003a, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Jul 2007.
    • Handle: RePEc:mse:cesdoc:v07003a
    DOI: 10.1016/j.jmateco.2010.03.002
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    More about this item

    Keywords

    Saddle-path stability; endogenous cycles; heterogeneous agents; endogenous labor supply; borrowing constraint;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D30 - Microeconomics - - Distribution - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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