Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72712
Authors: 
Fisher, Walter H.
Heijdra, Ben J.
Year of Publication: 
2007
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 204
Abstract: 
In this paper we consider the implications of relative consumption externalities in the Blanchard-Yaari overlapping generations framework. Unlike most of the macroeconomic literature that studies this question, the differences between agents, and, thus, in their relative position, persist in equilibrium. We show in our fixed employment model that consumption externalities lower consumption and the capital stock in long-run equilibrium, a result in sharp contrast to the recent findings of Liu and Turnovsky (2005). In addition, we solve for the intertemporal path of the economy to investigate its response to demographic shocks, specifically, to permanent changes in the birth and death rates.
Subjects: 
relative consumption
overlapping generations
demographic shocks
JEL: 
D91
E21
Document Type: 
Working Paper

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