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International status seeking, trade, and growth leadership

Simone Valente

Canadian Journal of Economics, 2009, vol. 42, issue 2, 554-589

Abstract: We study a two-country endogenous growth model where the utility of agents in developing countries is affected by consumption gaps with advanced economies. International status seeking tends to revert growth differentials in favour of the developing country. Preferences with endogenous status desire generate convergence in growth rates in the presence of structural gaps and convergence in income levels if productivity differences disappear. This process is driven by declining terms of trade and faster capital accumulation of the status seeker. The model predictions are shown to be consistent with the stylized facts that characterized the growth performance of East Asian economies.

JEL-codes: D91 F12 O33 (search for similar items in EconPapers)
Date: 2009
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Journal Article: International status seeking, trade, and growth leadership (2009) Downloads
Working Paper: International Status Seeking, Trade, and Growth Leadership (2007) Downloads
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