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Growth, Stagnation And Status Preference

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  • Ryu‐ichiro Murota
  • Yoshiyasu Ono

Abstract

We consider three objects of people's status preference, consumption, physical capital holding and money holding, and show that an economy grows or stagnates depending on which object people most seriously take as status. If the main object of status preference is consumption, a steady state with full employment is reached. If it is physical capita (viz. a producible asset), permanent growth with full employment occurs. However, if it is money (viz. an unproducible asset), stagnation with persistent unemployment arises.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Metroeconomica.

Volume (Year): 62 (2011)
Issue (Month): 1 (02)
Pages: 122-149

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Handle: RePEc:bla:metroe:v:62:y:2011:i:1:p:122-149

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References

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  1. Ono, Yoshiyasu, 2001. "A Reinterpretation of Chapter 17 of Keynes's General Theory: Effective Demand Shortage under Dynamic Optimization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(1), pages 207-36, February.
  2. Futagami, Koichi & Shibata, Akihisa, 1998. "Keeping one step ahead of the Joneses: Status, the distribution of wealth, and long run growth," Journal of Economic Behavior & Organization, Elsevier, vol. 36(1), pages 109-126, July.
  3. Michael Rauscher, 1997. "Conspicuous consumption, economic growth, and taxation," Journal of Economics, Springer, vol. 66(1), pages 35-42, February.
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  11. Gong, Liutang & Zou, Heng-Fu, 2001. "Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 284-93, May.
  12. Cole, Harold L & Mailath, George J & Postlewaite, Andrew, 1992. "Social Norms, Savings Behavior, and Growth," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1092-1125, December.
  13. Weiss, Y. & Fershtman, C., 1997. "Social Status and Economic Performance: A Survey," Papers 19-97, Tel Aviv.
  14. Ngo Van Long & Koji Shimomura, 2002. "Relative Wealth, Status Seeking, and Catching Up," CIRANO Working Papers 2002s-09, CIRANO.
  15. Fershtman, Chaim & Murphy, Kevin M & Weiss, Yoram, 1996. "Social Status, Education, and Growth," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 108-32, February.
  16. Corneo, Giacomo & Jeanne, Olivier, 1997. "On relative wealth effects and the optimality of growth," Economics Letters, Elsevier, vol. 54(1), pages 87-92, January.
  17. Koichi Kawamoto, 2007. "Preferences for Educational Status, Human Capital Accumulation, and Growth," Journal of Economics, Springer, vol. 91(1), pages 41-67, May.
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Cited by:
  1. Ryu-ichiro Murota & Yoshiyasu Ono, 2010. "A Reinterpretation of the Keynesian Consumption Function and Multiplier Effect," ISER Discussion Paper 0779, Institute of Social and Economic Research, Osaka University.

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