Keeping up with the Ageing Joneses

Fisher, Walter H. and Heijdra, Ben J. (March 2007) Keeping up with the Ageing Joneses. IHS Economics Series 204

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Abstract or Table of Contents

Abstract: In this paper we consider the implications of relative consumption externalities in the Blanchard-Yaari overlapping generations framework. Unlike most of the macroeconomic literature that studies this question, the differences between agents, and, thus, in their relative position, persist in equilibrium. We show in our fixed employment model that consumption externalities lower consumption and the capital stock in long-run equilibrium, a result in sharp contrast to the recent findingsof Liu and Turnovsky (2005). In addition, we solve for the intertemporal path of the economy to investigate its response to demographic shocks, specifically, to permanent changes in the birth and death rates.;

Item Type: IHS Series
Keywords: 'Relative consumption' 'Overlapping generations' 'Demographic shocks'
Classification Codes (e.g. JEL): D91, E21
Status: Published
Date Deposited: 26 Sep 2014 10:38
Last Modified: 22 Jul 2017 14:02
URI: http://irihs.ihs.ac.at/id/eprint/1761

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