Growth, Stagnation and Status Preference
32 Pages Posted: 19 Jun 2008
Date Written: June 2008
We consider three objects of people's status preference, consumption, physical capital holding and money holding, and show that an economy grows or stagnates depending on which object people most seriously take as status. If the main object of status preference is consumption, a steady state with full employment is reached. If it is physical capital (viz. a producible asset), permanent growth with full employment occurs. However, if it is money (viz. an unproducible asset), stagnation with persistent unemployment arises.
Keywords: Status Preference, Persistent Unemployment, Long-Run Growth
JEL Classification: E12, E24, O41
Suggested Citation: Suggested Citation