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Relative consumption, relative wealth and growth

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  • Tournemaine, Frederic
  • Tsoukis, Christopher

Abstract

In a growth model where individuals care about their social status measured both by consumption and wealth comparisons, we show that status comparison in wealth heightens economic growth, while status comparison in consumption may affect negatively economic growth.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 100 (2008)
Issue (Month): 2 (August)
Pages: 314-316

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Handle: RePEc:eee:ecolet:v:100:y:2008:i:2:p:314-316

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Web page: http://www.elsevier.com/locate/ecolet

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References

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  1. Mankiw, N. Gregory & Weinzierl, Matthew, 2006. "Dynamic scoring: A back-of-the-envelope guide," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1415-1433, September.
  2. Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen Turnovsky, 2004. "Habit Formation, Catching Up with the Joneses, and Economic Growth," Working Papers UWEC-2004-09-P, University of Washington, Department of Economics, revised Jan 2004.
  3. Michael Rauscher, 1997. "Conspicuous consumption, economic growth, and taxation," Journal of Economics, Springer, vol. 66(1), pages 35-42, February.
  4. Walter Fisher & Franz Hof, 2000. "Relative consumption, economic growth, and taxation," Journal of Economics, Springer, vol. 72(3), pages 241-262, October.
  5. 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.
  6. Corneo, Giacomo & Jeanne, Olivier, 1997. "On relative wealth effects and the optimality of growth," Economics Letters, Elsevier, vol. 54(1), pages 87-92, January.
  7. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  8. Chris Tsoukis, 2007. "Keeping Up With The Joneses, Growth, And Distribution," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(4), pages 575-600, 09.
  9. Pham, Thi Kim Cuong, 2005. "Economic growth and status-seeking through personal wealth," European Journal of Political Economy, Elsevier, vol. 21(2), pages 407-427, June.
  10. Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2004. "Consumption Externalities, Habit Formation and Equilibrium Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 231-251, 06.
  11. Choudhary, M. Ali & Levine, Paul, 2006. "Idle worship," Economics Letters, Elsevier, vol. 90(1), pages 77-83, January.
  12. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
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Citations

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Cited by:
  1. Christopher Tsoukis & Frederic Tournemaine, 2011. "Social Conflict, Growth And Factor Shares," Metroeconomica, Wiley Blackwell, vol. 62(2), pages 283-304, 05.
  2. Phu Nguyen-Van & Thi Kim Cuong Pham, 2008. "Endogenous Fiscal Policies, Environmental Quality, and Status-Seeking Behavior," Working Papers 29, Development and Policies Research Center (DEPOCEN), Vietnam.
  3. Tournemaine, frederic & Tsoukis, Chris, 2008. "Status, endogenous reference standards, and the growth-inequality relation: A note," MPRA Paper 10420, University Library of Munich, Germany.
  4. Frederic Tournemaine & Christopher Tsoukis, 2010. "Status, Fertility, Growth And The Great Transition," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(03), pages 553-574.
  5. Christopher Tsoukis & Frédéric Tournemaine, 2013. "Status In A Canonical Macro Model: Labour Supply, Growth And Inequality," Manchester School, University of Manchester, vol. 81, pages 65-92, October.
  6. Tournemaine, Frederic & Tsoukis, Christopher, 2010. "Gain versus pain from status and ambition: Effects on growth and inequality," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 286-294, April.
  7. Jang-Ting Guo & Juin-Jen Chang, 2008. "Social Status and Optimal Income Taxation," Working Papers 200814, University of California at Riverside, Department of Economics, revised Dec 2008.

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