Assuming that there exists a preference for luxury goods and a knowledge spillover from luxury goods production to goods production, this paper constructs an endogenous economic growth model. The model predicts two steady states: one is a steady positive growth state with regard to luxury goods production, and the other is a zero growth state in the absence of luxury goods production. Thus, this study examines the polarization of economies based on luxury goods consumption.
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Article provided by Economics Bulletin in its journal Economics Bulletin.
Find related papers by JEL classification: O1 - Economic Development, Technological Change, and Growth - - Economic Development E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
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