Difference or Ratio: Implications of Status Preference on Stagnation
Yoshiyasu Ono and
Katsunori Yamada ()
Australian Economic Papers, 2018, vol. 57, issue 3, 346-362
We consider a dynamic macroeconomic model where households derive utility from wealth comparisons. Measure of relative affluence can be the ratio to, or the difference from, the social average. These two specifications lead to quite different equilibrium consequences: under the ratio specification full employment is always realised, whereas under the difference specification persistent shortage of aggregate demand can result. Using data of an experiment on status concern, we empirically find that the difference specification of relative affluence fits the data better than the ratio specification. Our work may help in understanding mechanisms behind recent stagnation in developed economies.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
Working Paper: Difference or Ratio: Implication of Status Preference on Stagnation (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:57:y:2018:i:3:p:346-362
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X
Access Statistics for this article
Australian Economic Papers is currently edited by Daniel Leonard
More articles in Australian Economic Papers from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().