Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/213427
Authors: 
Hof, Franz X.
Prettner, Klaus
Year of Publication: 
2020
Series/Report no.: 
ECON WPS No. 01/2020
Abstract: 
We employ a novel approach for analyzing the effects of relative consumption and relative wealth preferences on both the decentralized and the socially optimal economic growth rates. In the pertinent literature these effects are usually assessed by examining the dependence of the growth rates on the two parameters of the instantaneous utility function that seem to measure the strength of the relative consumption and the relative wealth motive. We go beyond the sole consideration of parameters by revealing the fundamental factors that ultimately determine long-run growth. In doing so we identify widely used types of status preferences in which the traditional approach is prone to erroneous conclusions. For example, in one of these specifications the parameter that seems to determine the strength of the relative consumption motive actually also affects the strength of the relative wealth motive and the elasticity of intertemporal substitution.
Subjects: 
relative consumption
relative wealth
quest for status
long-run economicgrowth
social optimality
deep factors
JEL: 
D31
D62
O10
O30
Document Type: 
Working Paper

Files in This Item:
File
Size
689.08 kB





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