A note on conspicuous leisure, animal spirits and endogenous cycles
Date
2004
Authors
Weder, M.
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Journal article
Citation
Portuguese Economic Journal, 2004; 3(1):1-13
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Abstract
This paper investigates general equilibrium effects of conspicuous leisure. It finds that leisure externalities reduce the degree of other market imperfections needed to generate indeterminacy or sunspot equilibria - endogneous cycles become empirically more plausible. Sunspot equilibria are possible with a downward-sloping labor demand schedule. The economic reasoning behind the result is that with conspicuous-externalities, labor is drawn more easily in and out of leisure to help fulfill agents expectations.
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© Springer