Non-monotonic welfare dynamics in a growing economy
AbstractIn an overlapping generations economy with endogenous income growth, I combine themes from the work of Cooper et al. (2001), Kapur (2005) and Eaton and Eswaran (2009) in order to provide an example of an economy whose welfare dynamics are non-monotonic. Particularly, the evolution of social welfare can be distinguished between two different regimes that arise naturally during the process of economic development. At relatively early stages, status concerns are inactive and welfare increases following the rising consumption of normal goods. During the later stages, however, individuals engage in some type of status competition that does not allow consumption to improve their well-being: their welfare actually declines as successive generations of agents increase labour effort at the expense of leisure.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 33 (2011)
Issue (Month): 2 (June)
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Web page: http://www.elsevier.com/locate/inca/622617
Welfare Economic growth Status goods Leisure;
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