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Stochastic Growth with the Social-Status Concern: The Existence of a Unique Stable Distribution

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Author Info

  • Liutang Gong

    (Guanghua School of Management, Peking University)

  • Xiaojun Zhao

    (Guanghua School of Management, Peking University)

  • Heng-fu Zou

    (China Economics and Management Academy, CUFE)

Abstract

This paper extends Kurz¡¯s (1968) growth model to a stochastic growth framework with the social-status concern and production shocks. Using the stochastic monotonicity of stochastic dynamic system and methods using in Zhang (2007), the existence and stability of invariant distribution has been investigated. Different from the existence of multiple steady states under certainty, it is shown that there exists a unique stable invariant distribution under uncertainty.

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File URL: http://down.aefweb.net/WorkingPapers/w408.pdf
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Bibliographic Info

Paper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 408.

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Length: 23 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:cuf:wpaper:408

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Web page: http://cema.cufe.edu.cn/
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Related research

Keywords: Stochastic growth; the Spirit of capitalism; Stochastic dominance; Multiple equilibria;

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References

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  1. Stachurski, John, 2002. "Stochastic Optimal Growth with Unbounded Shock," Journal of Economic Theory, Elsevier, vol. 106(1), pages 40-65, September.
  2. Yuzhe Zhang, 2005. "Stochastic optimal growth with a non-compact state space," Working Papers 639, Federal Reserve Bank of Minneapolis.
  3. Fershtman, C. & Murphy, K.M., 1993. "Social Status, Education and Growth," Papers 8-93, Tel Aviv.
  4. Liutang Gong & Heng-fu Zou, 2001. "Direct preferences for wealth, the risk premium puzzle, growth, and policy effectiveness," CEMA Working Papers 53, China Economics and Management Academy, Central University of Finance and Economics.
  5. Heng-fu Zou, 1995. "The spirit of capitalism and savings behavior," CEMA Working Papers 79, China Economics and Management Academy, Central University of Finance and Economics.
  6. 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.
  7. Heng-fu Zou, 1995. "'The spirit of capitalism' and long-run growth," CEMA Working Papers 94, China Economics and Management Academy, Central University of Finance and Economics.
  8. Takashi Kamihigashi, 2005. "Stochastic Optimal Growth with Bounded or Unbounded Utility and with Bounded or Unbounded Shocks," Discussion Paper Series 176, Research Institute for Economics & Business Administration, Kobe University.
  9. Nishimura, Kazuo & Stachurski, John, 2005. "Stability of stochastic optimal growth models: a new approach," Journal of Economic Theory, Elsevier, vol. 122(1), pages 100-118, May.
  10. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  11. Fershtman, C. & Weiss, Y., 1991. "Social Status , Culture and Economic Performance," Papers 32-91, Tel Aviv.
  12. Mirman, Leonard J. & Zilcha, Itzhak, 1975. "On optimal growth under uncertainty," Journal of Economic Theory, Elsevier, vol. 11(3), pages 329-339, December.
  13. Hopenhayn, Hugo A & Prescott, Edward C, 1992. "Stochastic Monotonicity and Stationary Distributions for Dynamic Economies," Econometrica, Econometric Society, vol. 60(6), pages 1387-406, November.
  14. Brock, William A. & Mirman, Leonard J., 1972. "Optimal economic growth and uncertainty: The discounted case," Journal of Economic Theory, Elsevier, vol. 4(3), pages 479-513, June.
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Cited by:
  1. Takashi Kamihigashi & John Stachurski, 2013. "Stochastic Stability in Monotone Economies," Discussion Paper Series DP2013-02, Research Institute for Economics & Business Administration, Kobe University.
  2. Takashi Kamihigashi & John Stachurski, 2011. "Existence, Stability and Computation of Stationary Distributions: An Extension of the Hopenhayn-Prescott Theorem," Discussion Paper Series DP2011-32, Research Institute for Economics & Business Administration, Kobe University.

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