Growth Effects of Consumption Jealousy in a Two-Sector Model

Duernecker, Georg (January 2007) Growth Effects of Consumption Jealousy in a Two-Sector Model. Former Series > Working Paper Series > IHS Economics Series 201


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Abstract: This paper aims at analyzing the implications of individuals' consumption jealousy on the dynamic structure of a two-sector model economy. We find that status-seeking substantially influences both, the long-term properties and the adjustment behavior of the model. Depending on the status motive, productivity disturbances might induce countercyclical responses of work effort whereas preference shocks are expected to generate an overshooting relative capital intensity. Generally we findthat, for empirically plausible values of the intertemporal elasticity of substitution, a higher degree of consumption jealousy induces agents to devote more time to education which stimulates human capital accumulation and hence promotes economic growth.;

Item Type: IHS Series
Keywords: 'Status-seeking' 'Economic growth' 'Transitional dynamics' 'Human capital'
Classification Codes (e.g. JEL): D91, E21, O41
Date Deposited: 26 Sep 2014 10:38
Last Modified: 27 Sep 2019 06:45
ISBN: 1605-7996

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