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Stochastic growth with social-status concern: The existence of a unique stable distribution

  • Gong, Liutang
  • Zhao, Xiaojun
  • Yang, Yunhong
  • Hengfu, Zou

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

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Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 46 (2010)
Issue (Month): 4 (July)
Pages: 505-518

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Handle: RePEc:eee:mateco:v:46:y:2010:i:4:p:505-518
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  1. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-59, July.
  2. Zhang, Yuzhe, 2007. "Stochastic optimal growth with a non-compact state space," MPRA Paper 23107, University Library of Munich, Germany.
  3. Stachurski, J., 2001. "Stochastic Optimal Growth with Unbounded Shock," Department of Economics - Working Papers Series 777, The University of Melbourne.
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  9. Benhabib, Jess & Nishimura, Kazuo, 1979. "The hopf bifurcation and the existence and stability of closed orbits in multisector models of optimal economic growth," Journal of Economic Theory, Elsevier, vol. 21(3), pages 421-444, December.
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  13. 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.
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  19. 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.
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