Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171518
Authors: 
Valente, Simone
Year of Publication: 
2007
Series/Report no.: 
Economics Working Paper Series 07/75
Abstract: 
This paper formalizes international status seeking in a two-country model of endogenous growth: utility of agents in developing countries is affected by consumption gaps with advanced economies. By distorting intertemporal choices, envy tends to revert growth differentials in favor of the developing country when traded goods are substitutes. Notably, asymmetric pref- erences with endogenous status desire generate (i) convergence in growth rates in the presence of structural gaps, and (ii) convergence in income levels, if productivity differences are absorbed by technology diffusion. This process is driven by declining terms of trade and faster capital accumulation of the status seeker. A calibration exercise shows that the model predictions are consistent with the stylized facts that characterized the growth performance of East Asian economies.
Subjects: 
Endogenous Growth
International Trade
Consumption Externalities
Productivity Differences
Status Seeking
Technology Diffusion
JEL: 
O33
F12
D91
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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