Can Consumption Spillovers Be a Source of Equilibrium Indeterminacy?

J. Caballé, J. Alonso-Carrera, X. Raurich

Research output: Contribution to journalArticleResearchpeer-review

22 Citations (Scopus)


In this paper, we show that consumption externalities are a source of equilibrium indeterminacy in a growth model with endogenous labor supply. In particular, when the marginal rate of substitution (MRS) between an agent's own consumption and the others' consumption is constant along the equilibrium path, the equilibrium does not exhibit indeterminacy. In contrast, when that MRS is not constant, the equilibrium may exhibit indeterminacy even if the elasticity of the labor demand is smaller than the elasticity of the Frisch labor supply.
Original languageEnglish
Pages (from-to)2883-2902
Number of pages20
JournalJournal of Economic Dynamics and Control
Issue number9
Publication statusPublished - Sept 2008


  • Consumption externalities
  • Labor supply
  • Indeterminacy


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