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Growth or Stagnation: Economic Consequences of Status Preference

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  • Ono, Y.

Abstract

Using a dynamic optimization model with status preference this paper shows that depending on the object of people's status preference an economy exhibits a completely opposite performance; permanent growth or persistent stagnation. If the object is a producible asset (viz. real capital), new employment is created and extra production is invested in capital, which generates permanent growth even under decreasing returns to capital. If it is an unproducible asset (viz. money), commodity demand is not created and deflation occurs. Full employment is never reached under nominal wage sluggishness although prices and wages continue to adjust.

Suggested Citation

  • Ono, Y., 2001. "Growth or Stagnation: Economic Consequences of Status Preference," ISER Discussion Paper 0524, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0524
    as

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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2001/dp0524.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    UNEMPLOYMENT ; INVESTMENTS ; CAPITAL;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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