Nonlinear dynamics and chaos in an OLG growth model with endogenous labour supply and multiplicative external habits
نویسندگان
چکیده
This paper analyses the mathematical properties of an overlapping generations growth model with endogenous labour supply and multiplicative external habits. The dynamics of the economy is characterised by a two-dimensional map describing the time evolution of capital and labour supply. We show that if the relative importance of external habits in the utility function is sufficiently high, multiple (determinate or indeterminate) fixed points and poverty traps can exist. In addition, cyclical or quasi-cyclical behaviour and/or coexistence of attractors may occur. Endogenous preferences represent a topic of greater importance in economic theory. In particular, they influence individual choices about consumption and saving paths over time, and can be responsible of endogenous fluctuations and nonlinear dynamics in macroeconomic variables (e.g., per capita output). This study examines an economic growth model with overlapping generations where habit formation is a source of local and global bifurcations.
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