Wissenschaftliche Berichte:
F.X. Hof, K. Prettner:
"The Quest for Status and R&D-based Growth";
Bericht für Vienna University of Technology, Working Papers in Economic Theory and Policy;
Berichts-Nr. 1,
2016;
59 S.
Kurzfassung englisch:
We analyze the impact of status preferences on technological progress and long-run
economic growth. For this purpose, we extend the standard relative wealth approach
by allowing the two components of the representative household´s wealth, physical
capital and shares, to differ with respect to their status relevance. Relative wealth
preferences imply that the effective rate of return of saving in the form of a particular
asset is the sum of its market rate of return and its status-related extra return. It is
shown that the status relevance of shares is of crucial importance: First, an increase in
the intensity of the quest for status raises the steady-state economic growth rate only
if the status-related extra return of shares is strictly positive. Second, for any given
degree of status consciousness, the long-run economic growth rate depends positively
on the relative status relevance of shares. Third, while in the standard model the decentralized
long-run economic growth rate is less than its socially optimal counterpart,
the wealth externalities in our model counterbalance this distortion to some extent
provided that shares matter for status.
Schlagworte:
Status concerns, relative wealth, technological progress, long-run economic growth, social optimality.
Erstellt aus der Publikationsdatenbank der Technischen Universität Wien.