Cycles and chaos in the one-sector growth model with elastic labor supply

Publications: Working paper

Abstract

It is shown that the discrete-time version of the neoclassical one-sector optimal growth model with endogenous labor supply and standard assumptions on technology and preferences admits periodic solutions of any period as well as chaotic solutions. Solutions with period 2 are possible for any time-preference factor between 0 and 1, whereas the existence of periodic solutions with other periods and the existence of chaotic solutions are only demonstrated by means of a specific example involving strong time-preference. The results are derived via constructive proofs that use Cobb-Douglas production functions.
Original languageEnglish
Number of pages21
Publication statusPublished - May 2015

Publication series

SeriesVienna Economics Papers
NumberNo. 1505

Austrian Fields of Science 2012

  • 502047 Economic theory

Keywords

  • VWL
  • CMI
  • MR

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