Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174589
Authors: 
Haagsma, Rein
Year of Publication: 
2018
Series/Report no.: 
Economics Discussion Papers 2018-12
Abstract: 
This paper examines the impact of income growth and income inequality on household saving rates and payoffs in a non-cooperative game where each player's payoff depends on her present and future consumption and her rank in the present-consumption distribution. The setting is a pooling equilibrium with three clusters of successive income groups, each cluster having its own present-consumption standard and rank in the present-consumption distribution. In this way the analysis addresses the saving behaviour and welfare of three social classes: the lower, middle and upper class. The author finds explanations for the Easterlin paradox and the Kuznets consumption puzzle and concludes that rank concerns tend to weaken the standard effect of inequality on aggregate saving.
Subjects: 
status
relative consumption
saving
income inequality
income growth
JEL: 
C72
D31
D62
E21
I31
Z10
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Working Paper

Files in This Item:
File
Size
301.41 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.