Imports, Status Preference, and Foreign Borrowing

Fisher, Walter H. (September 2004) Imports, Status Preference, and Foreign Borrowing. Former Series > Working Paper Series > IHS Economics Series 161


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Abstract: This paper considers the implications of consumption and borrowing externalities in a small open economy framework. The former reflect the assumption that status conscious agents care about the relative consumption of imported goods, whilethe latter arise because agents do not take into account the effects of their borrowing decisions on the interest rate on debt. We analyze in the paper the impact of an increase in the degree of status preference on the saddlepath adjustment of the decentralized economy. In addition, the contrasting steadystate and dynamic properties of the social planner's economy are derived, along with the corresponding optimal tax and subsidy policies.;

Item Type: IHS Series
Keywords: 'Imports' 'Status-preference' 'Current account dynamics'
Classification Codes (e.g. JEL): E21, F41
Date Deposited: 26 Sep 2014 10:38
Last Modified: 27 Sep 2019 06:45
ISBN: 1605-7996

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