Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71218
Authors: 
Fisher, Walter H.
Hof, Franz X.
Year of Publication: 
2000
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 85
Abstract: 
This paper introduces consumption externalities into a Ramsey-type model with endogenous labour supply and homogeneous agents. The instantaneous utility of any consumer is assumed to depend on work effort, own consumption and relative consumption, where the latter determines the individual's status in the society. Appropriate normality conditions with respect to consumption and leisure ensure that at least in the long run status-conscious individuals consume and work too much, compared to the social optimum, and that the capital stock is too high. Public policy can, however, induce the private sector to attain the social optimum by designing an optimal consumption tax policy.
Subjects: 
status
relative consumption
work effort
JEL: 
D62
D91
E21
Document Type: 
Working Paper

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