An aggregative model of capital accumulation with leisure-dependent utility

This paper analyzes an aggregative optimal-growth model where both consumption and leisure enter as arguments in the utility function. If consumption and leisure are substitutes, the model can generate multiple steady states. If consumption and leisure are complements, the optimal path may turn out to be cyclical. Preferences play an important role in determining the steady state to which the economy converges. (C) 1998 Elsevier Science B.V. All rights reserved.