Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72263
Authors: 
Fisher, Walter H.
Hof, Franz X.
Year of Publication: 
2005
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 181
Abstract: 
This paper introduces the quest for status into the Ramsey model with endogenous labor supply. We focus our attention on relative wealth preferences. In contrast to relative consumption preferences, they allow for the possibility that agents work too little in the long run, while under both specifications the steady-state levels of consumption and the stock of physical capital exceed their socially optimal counterparts. The initial phase of transitional dynamics is unambiguously characterized by under-consumption and excessive work effort. The social optimum can be replicated by taxing capital income, where the optimal tax rate increases as physical capital accumulates.
Subjects: 
status
relative consumption
relative wealth
endogenous labor supply
JEL: 
D62
D91
E21
Document Type: 
Working Paper

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