Multiple Interior Steady States in the Ramsey Model with Elastic Labor Supply
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.
Multiple steady states, Ramsey model, Elastic labor supply, Neoclassical growth
C61, C62, E13, O41
Research Institute for Economics and Business Administration,
Rokkodai-cho, Nada-ku, Kobe