Rejuveniles and Growth
University of Aarhus Economics Working Paper No. 2007-11
27 Pages Posted: 10 Jun 2008
Date Written: May 12, 2007
Abstract
Rejuveniles are people who cultivate tastes and mind-sets traditionally associated with those younger than themselves. (Noxon, 2006) In this paper, we study a standard AK growth model of overlapping generations populated by rejuveniles. For our purposes, rejuveniles are old agents who derive utility from keeping up their consumption with that of the current young. We find that such cross-generational keeping up is capable of generating interesting equilibrium growth dynamics, including growth cycles. No such growth dynamics is possible either in the baseline model, one where no such generational consumption externality exists, or for almost any other form of keeping up. Steady-state growth in a world with rejuveniles may be higher than that obtained in the baseline model.
Keywords: growth cycles, keeping up preferences, consumption externality
JEL Classification: E13, E32
Suggested Citation: Suggested Citation
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