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Complex stock price dynamics under Max Weber’s spirit of capitalism hypothesis

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  • Marco Airaudo

    (Drexel University)

Abstract

We introduce Max Weber’s spirit of capitalism hypothesis into a benchmark Lucas’ tree asset pricing model by assuming that economic agents derive direct utility from wealth. We prove the existence of perfect foresight equilibria where the price-dividend ratio displays explosive rational bubble solutions, endogenous periodic cycles and chaotic dynamics.

Suggested Citation

  • Marco Airaudo, 2017. "Complex stock price dynamics under Max Weber’s spirit of capitalism hypothesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 64(1), pages 47-73, June.
    • Handle: RePEc:spr:joecth:v:64:y:2017:i:1:d:10.1007_s00199-016-0969-0
    DOI: 10.1007/s00199-016-0969-0
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    Cited by:

    1. Yuanping Wang & Yingjie Niu & Siwen Gong, 2022. "Robust consumption policy with the desire for wealth accumulation," Review of Economics of the Household, Springer, vol. 20(3), pages 993-1025, September.
    2. Michau, Jean-Baptiste & Ono, Yoshiyasu & Schlegl, Matthias, 2023. "Wealth preference and rational bubbles," European Economic Review, Elsevier, vol. 156(C).

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    More about this item

    Keywords

    Asset pricing; Bubbles; Endogenous cycles; Chaotic dynamics; Status; Wealth preferences; Spirit of capitalism;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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