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

  • 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)

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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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
Contact details of provider: Web page: http://cema.cufe.edu.cn/

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  1. Tjalling C. Koopmans, 1963. "On the Concept of Optimal Economic Growth," Cowles Foundation Discussion Papers 163, Cowles Foundation for Research in Economics, Yale University.
  2. 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.
  3. Zhang, Yuzhe, 2007. "Stochastic optimal growth with a non-compact state space," Journal of Mathematical Economics, Elsevier, vol. 43(2), pages 115-129, February.
  4. 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.
  5. Fershtman, C. & Murphy, K.M., 1993. "Social Status, Education and Growth," Papers 8-93, Tel Aviv.
  6. Mirman, Leonard J. & Zilcha, Itzhak, 1975. "On optimal growth under uncertainty," Journal of Economic Theory, Elsevier, vol. 11(3), pages 329-339, December.
  7. Chaim Fershtman & Yoram Weiss, 1991. "Social Status, Culture and Economic Performance," Discussion Papers 1007, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. 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.
  9. 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.
  10. Stachurski, J., 2001. "Stochastic Optimal Growth with Unbounded Shock," Department of Economics - Working Papers Series 777, The University of Melbourne.
  11. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
  12. 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.
  13. 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.
  14. 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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