Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71232
Authors: 
Fisher, Walter H.
Hof, Franz X.
Year of Publication: 
2001
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 106
Abstract: 
In our modified version of the small open economy Ramsey model, we assume that agents have preferences over consumption and status which, in turn, is determined by relative wealth. This extension potentially eliminates the standard model's counterfactual result that an impatient country over time mortgages all of its capital and labor income. We show that the steady-state values of net assets and consumption, the speed of convergence and, in particular, the direction of adjustment during the transition depend crucially upon the degree of status consciousness. The latter also influences the economy's response to macroeconomic shocks.
Subjects: 
status seeking
relative wealth
open economy dynamics
JEL: 
E21
F41
Document Type: 
Working Paper

Files in This Item:
File
Size
442.13 kB





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