Household Utility Function in the Computable Overlapping Generations Model

We consider the specification of the household utility function in the overlapping generations model. We apply the two criteria for the selection of utility function: the zero long-run elasticity of labor supply and the hump-shaped consumption profile. We identify some appropriate utility functions that satisfy both criteria. We compare the two utility functions through the simulations of both the household behavior and the macroeconomic behavior in overlapping generations model with aging population. The Kimball and Shapiro (KS) utility function seems to be a promising one for the simulation of household behavior and overlapping generations model.