Positional Preferences and Efficiency in a Dynamic Economy

Thomas Aronsson (), Sugata Ghosh () and Ron Wendner
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Thomas Aronsson: Umea University, Sweden
Sugata Ghosh: Brunel University, London

Graz Economics Papers from University of Graz, Department of Economics

Abstract: In an endogenous growth model, we characterize the conditions under which positional preferences for consumption and wealth do not cause inefficiency and derive an optimal tax policy response in cases where these conditions are not satisfied. The concerns for relative consumption and relative wealth partly emanate from social comparisons with people in other countries. We distinguish between a (conventional) welfarist government and a non-welfarist government that does not attach any social value to relative concerns. We also compare the outcome of Nash-competition among local/national governments with the resource allocation implied by a global social optimum both under welfarism and non-welfarism.

Keywords: Positional preferences; Endogenous growth; Wealth; Intertemporal distortion, Welfarism; Non-welfarism; Inter-country externalities; Pigouvian taxation. (search for similar items in EconPapers)
JEL-codes: E71 H11 O43 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-gro, nep-mac and nep-pbe
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Related works:
Journal Article: Positional preferences and efficiency in a dynamic economy (2023)
Working Paper: Positional Preferences and Efficiency in a Dynamic Economy (2021)
Working Paper: Positional Preferences and Efficiency in a Dynamic Economy (2020)
Working Paper: Positional Preferences and Efficiency in a Dynamic Economy (2020)
Working Paper: Positional Preferences and Efficiency in a Dynamic Economy (2020)
Working Paper: Positional Preferences and Efficiency in a Dynamic Economy (2020)
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