Conspicuous consumption and political regimes: Evidence from East and West Germany

Tim Friehe and Mario Mechtel

European Economic Review, 2014, vol. 67, issue C, 62-81

Abstract: This paper investigates the influence of political regimes on the relative importance of conspicuous consumption. We use the division of Germany into the communist GDR and the democratic FRG and its reunification in 1990 as a natural experiment. Relying on household data that are representative for Germany, our empirical results strongly indicate that conspicuous consumption is relatively more important in East Germany. Significantly, although we find some convergence, a considerable gap in conspicuous consumption expenditures remains even 18 years after the German reunification.

Keywords: Conspicuous consumption; Status-seeking; Political regime; Behavioral economics (search for similar items in EconPapers)
JEL-codes: D12 D62 P36 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (68)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:67:y:2014:i:c:p:62-81

DOI: 10.1016/j.euroecorev.2014.01.005

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