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

Gerhard Sorger

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.

Department of Economics
No. of pages
Publication date
Austrian Fields of Science 2012
502047 Economic theory
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