Title

Multiple Interior Steady States in the Ramsey Model with Elastic Labor Supply

Abstract

In this paper we show that multiple interior steady states are possible in the Ramsey model with elastic labor supply. In particular we establish the following three results: (i) for any discount factor and production function, there is a utility function such that a continuum of interior steady states exist; (ii) the number of interior steady states can also be any finite number; and (iii) for any discount factor and production function, there is a utility function such that there is no interior steady state. Some numerical examples are provided.

Keywords

Multiple steady states, Ramsey model, Elastic labor supply, Neoclassical growth

JEL Classification

C61, C62, E13, O41

Inquiries

Takashi KAMIHIGASHI
Research Institute for Economics and Business Administration,
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059