Venditti

Publications

Sunspots and Non-Linear Dynamics – Essays in honor of Jean-Michel GrandmontBookStudies in Economic Theory, Alain Venditti, Kazuo Nishimura and Nicholas C. Yannelis (Eds.), 2017, Volume 31, 409 pages, Springer International Publishing, 2017

This book presents the state-of-the-art in non-linear dynamics and sunspots. These two topics have been the core of an international conference on instability and public policies in a globalized world, organized at Aix-Marseille School of Economics and GREQAM in honor of Jean-Michel Grandmont. He has made significant contributions on general equilibrium theory, monetary theory, learning, aggregation, non-linear dynamics and sunspots. This book assembles contributions by Jean-Michel Grandmont's colleagues, students and friends that have been influenced by his works and that are at the frontier of research in this domain today.

Sunspot Fluctuations in Two-Sector Models with Variable Income EffectsBook chapterFrédéric Dufourt, Kazuo Nishimura, Carine Nourry and Alain Venditti, In: Sunspots and Non-Linear Dynamics - Essays in Honor of Jean-Michel Grandmont, K. Nishimura, A. Venditti and N. C. Yannelis (Eds.), 2017, Volume 31, pp. 71-96, Springer-Verlag, 2017

We analyze a version of the Benhabib and Farmer (1996) two-sector model with sector-specific externalities in which we consider a class of utility functions inspired from the one considered in Jaimovich and Rebelo (2009) which is flexible enough to encompass varying degrees of income effect. First, we show that local indeterminacy and sunspot fluctuations occur in 2-sector models under plausible configurations regarding all structural parameters—in particular regarding the intensity of income effects. Second, we prove that there even exist some configurations for which local indeterminacy arises under any degree of income effect. More precisely, for any given size of income effect, we show that there is a non-empty range of values for the Frisch elasticity of labor and the elasticity of intertemporal substitution in consumption such that indeterminacy occurs. This contrasts with the results obtained in one-sector models in both Nishimura et al. (2009), in which it is shown that indeterminacy cannot occur under either GHH and KPR preferences, and in Jaimovich (2008) in which local indeterminacy only arises for intermediary income effects.

Introduction (Chapter1)Book chapterKazuo Nishimura, Alain Venditti and Nicholas C. Yannelis, In: Sunspots and Non-Linear Dynamics - Essays in Honor of Jean-Michel Grandmont, K. Nishimura, A. Venditti and N. C. Yannelis (Eds.), 2017, Volume 31, pp. 1-11, Springer-Verlag, 2017

This chapter presents a brief overview of the career and main contributions of Professor Jean-Michel Grandmont. It also provides a summarized description of the 16 papers written in his honor by his friends and colleagues.

Nonseparable preferences do not rule out aggregate instability under balanced-budget rules: a noteJournal articleNicolas Abad, Thomas Seegmuller and Alain Venditti, Macroeconomic Dynamics, Volume 21, Issue 1, pp. 259-277, 2017

We investigate the role of nonseparable preferences in the occurrence of macroeconomic instability under a balanced-budget rule where government spending is financed by a tax on labor income. Considering a one-sector neoclassical growth model with a large class of nonseparable utility functions, we find that expectations-driven fluctuations occur easily when consumption and labor are Edgeworth substitutes or weak Edgeworth complements. Under these assumptions, an intermediate range of tax rates and a sufficiently low elasticity of intertemporal substitution in consumption lead to instability.

Introduction to international financial markets and banking systems crisesJournal articleRaouf Boucekkine, Kazuo Nishimura and Alain Venditti, Journal of Mathematical Economics, Volume 68, Issue C, pp. 87-91, 2017

This note introduces to the literature streams explored in the special section on international financial markets and banking systems crises. All topics tackled are related to the Great Recession. A brief overview of the research questions and related literatures is provided.

Public Spending as a Source of Endogenous Business Cycles in a Ramsey Model with Many AgentsJournal articleKazuo Nishimura, Carine Nourry, Thomas Seegmuller and Alain Venditti, Macroeconomic Dynamics, Volume 20, Issue 02, pp. 504-524, 2016

We introduce public spending, financed through income taxation, into the Ramsey model with heterogeneous agents. Public spending as a source of welfare generates more complex dynamics. In contrast to previous contributions focusing on similar models but with wasteful public spending, limit cycles through Hopf bifurcation and expectation-driven fluctuations appear if the degree of capital–labor substitution is high enough to be compatible with capital income monotonicity. Moreover, unlike frameworks with a representative agent, our results do not require externalities in production and are compatible with a weakly elastic labor supply with respect to wage.

Sunspot fluctuations in two-sector models: New results with additively separable preferencesJournal articleFrédéric Dufourt, Kazuo Nishimura and Alain Venditti, International Journal of Economic Theory, Volume 12, Issue 1, pp. 67-83, 2016

We analyze local indeterminacy and sunspot-driven fluctuations in the standard two-sector model with additively separable preferences. We provide a detailed theoretical analysis enabling us to derive relevant bifurcation loci and to characterize the steady-state local stability properties as a function of various structural parameters influencing the degree of increasing returns to scale, the amount of intertemporal substitution in consumption, and the elasticity of the aggregate labor supply curve. On the theoretical side, we prove the existence of both a flip and a Hopf bifurcation locus in the corresponding parameter space. We also show that local indeterminacy can be obtained under any labor supply elasticity or under an arbitrarily low elasticity of intertemporal substitution in consumption. On the empirical side, we find that indeterminacy and sunspot fluctuations are robust features of two-sector models, prevailing for most empirically plausible calibrations for these parameters. (This abstract was borrowed from another version of this item.)

Collateral and growth cycles with heterogeneous agentsJournal articleStefano Bosi, Mohanad Ismael and Alain Venditti, Journal of Macroeconomics, Volume 48, Issue C, pp. 327-350, 2016

We investigate the effects of collateral and monetary policy on economic growth within a Ramsey equilibrium model where agents have different discount factors. Introducing liquidity constraints in segmented markets where (poor) impatient agents without collateral have limited access to credit, we study their implications in terms of welfare and business cycles (based on deterministic cycles through bifurcations and self-fulfilling prophecies). We find that an accommodative monetary policy may be growth-enhancing and welfare-improving (through the inequality reduction) while making unpleasant fluctuations more likely. Conversely, a regulation reinforcing the role of collateral and tempering the financial market imperfections may stimulate the economic growth while pursuing the goal of stabilization.

On the (De)Stabilizing Effect of Public Debt in a Ramsey Model with Heterogeneous AgentsJournal articleKazuo Nishimura, Carine Nourry, Thomas Seegmuller and Alain Venditti, International Journal of Economic Theory, Volume 11, Issue 1, pp. 7-24, 2015

We introduce public debt in a Ramsey model with heterogenous agents and a public spending externality affecting utility which is financed by income tax and public debt. We show that public debt considered as a fixed portion of GDP can have a stabilizing or destabilizing effect depending on some fundamental elasticities. When the public spending externality is weak and the elasticity of capital labor substitution is low enough, public debt can only be destabilizing, generating damped or persistent macroeconomic fluctuations. Whereas when the public spending externality and the elasticity of capital labor substitution are strong enough, public debt can be stabilizing, driving to monotone convergence an economy experiencing damped or persistent fluctuations without debt.

Indeterminacy and sunspots in two-sector RBC models with generalized no-income-effect preferencesJournal articleFrédéric Dufourt, Kazuo Nishimura and Alain Venditti, Journal of Economic Theory, Volume 157, Issue C, pp. 1056-1080, 2015

We analyze sunspot-driven fluctuations in the standard two-sector {RBC} model with moderate increasing returns to scale and generalized no-income-effect preferences à la Greenwood, Hercovitz and Huffman [13]. We provide a detailed theoretical analysis enabling us to derive relevant bifurcation loci and to characterize the steady-state local stability properties as a function of various structural parameters. We show that local indeterminacy occurs through flip and Hopf bifurcations for a large set of values for the elasticity of intertemporal substitution in consumption, provided that the labor supply is sufficiently inelastic. Finally, we provide a detailed quantitative analysis of the model. Computing, on a quarterly basis, a new set of empirical moments related to two broadly defined consumption and investment sectors, we are able to identify, among the set of admissible calibrations consistent with sunspot equilibria, the ones that provide the best fit of the data. The model properly calibrated solves several empirical puzzles traditionally associated with two-sector {RBC} models.