Rejuveniles and Growth

University of Aarhus Economics Working Paper No. 2007-11

27 Pages Posted: 10 Jun 2008

See all articles by Richard C. Barnett

Richard C. Barnett

Drexel University - Department of Economics & International Business

Joydeep Bhattacharya

Iowa State University - Department of Economics

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

Barnett, Richard C. and Bhattacharya, Joydeep, Rejuveniles and Growth (May 12, 2007). University of Aarhus Economics Working Paper No. 2007-11, Available at SSRN: https://ssrn.com/abstract=1141785 or http://dx.doi.org/10.2139/ssrn.1141785

Richard C. Barnett (Contact Author)

Drexel University - Department of Economics & International Business ( email )

3141 Chestnut St.
Philadelphia, PA 19104
United States

Joydeep Bhattacharya

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-5886 (Phone)
515-294-0221 (Fax)