Stability properties in an endogenous growth model with elstic labour supply

The inclusion of a labour/leisure choice in endogenous growth models has interesting and somewhat counter-intuitive e ects. In existing one sector models a condition for indeterminacy is that labour demand is upwardsloping, which is di cult to reconcile with evidence. In this paper we give conditions for indeterminacy in a one sector model with decreasing returns to labour. We show that this requires that consumption and leisure are both highly intertemporally substitutable while the factors of production are highly complementary. We wish to thank G. Cazzavillan, R. Farmer, M. Salmon and participants in seminars in Florence, Istanbul and Warwick for helpful comments. All remaining errors are our own.