A model of growth with inherited tastes

Abstract

This research aims at studying a general equilibrium closed economy with overlapping generations and inherited tastes (aspirations), as in de la Croix (1996). It shows that the interaction between the intensity of aspirations and the elasticity of substitution of effective consumption affects the qualitative and quantitative long-term dynamics from both local and global perspectives. The related literature is extended by showing that 1) the Neimark-Sacker bifurcation found by de la Croix (1996) does not necessarily give rise to fluctuations 2) endogenous (long lasting) fluctuations occur through the emergence of period-doubling bifurcations.