An aggregative model of capital accumulation with leisure-dependent utility

This paper analyzes an aggregative optimal-growth model where both consumption and leisure enter as arguments in the utility function. If consumption and leisure are substitutes, the model can generate multiple steady states. If consumption and leisure are complements, the optimal path may turn out...

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Bibliographic Details
Published in:Journal of economic dynamics & control 1998-11, Vol.23 (2), p.255-276
Main Author: de Hek, Paul A.
Format: Article
Language:English
Subjects:
Capital formation
Consumption
Economic growth
Economic models
Forest products industry
Growth models
Leisure
Multiple steady states
Nonlinear dynamics
Optimal growth
Studies
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Summary:This paper analyzes an aggregative optimal-growth model where both consumption and leisure enter as arguments in the utility function. If consumption and leisure are substitutes, the model can generate multiple steady states. If consumption and leisure are complements, the optimal path may turn out to be cyclical. Preferences play an important role in determining the steady state to which the economy converges.
ISSN:0165-1889
1879-1743
DOI:10.1016/S0165-1889(97)00119-X