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Pré-Publication, Document De Travail Année : 2009

Local Determinacy with Non-separable Utility

Résumé

This paper introduces general formulations for both technology (with input substitution) and non-separable utility (compatible with balanced growth and stationary worked hours) into a benchmark RBC model. It is shown that intertemporal substitution and input substitutability lead to local determinacy and rule out stationary sunspot equilibria when labor demand is downward-sloping, in contrast with recent results obtained under the assumption of separable utility. The main intuition behind this result is shown to work as follows: in contrast with separable preferences, increasing the elasticity of intertemporal substitution in consumption necessarily implies decreasing the elasticity of constant-consumption labor supply, when utility is non-separable and concave, which affects unfavorably the occurrence of local indeterminacy.
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Dates et versions

halshs-00409585 , version 1 (10-08-2009)

Identifiants

  • HAL Id : halshs-00409585 , version 1

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Patrick-Antoine Pintus. Local Determinacy with Non-separable Utility. 2009. ⟨halshs-00409585⟩
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