Social Status, the Spirit of Capitalism, and the Term Structure of Interest Rates in Stochastic Production Economies

Liutang Gong, Yulei Luo () and Heng-Fu Zou ()

No 372, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This paper studies capital accumulation and equilibrium interest rates in stochastic production economies with the concern of social status. Given a specific utility function and production function, explicit solutions for capital accumulation and equilibrium interest rates have been derived. With the aid of steady-state distributions for capital stock, the effects of fiscal policies, social-status concern, and stochastic shocks on capital accumulation and equilibrium interest rates have been investigated. A significant finding of this paper is the demonstration of multiple stationary distributions for capital stocks and interest rates with the concern of social status.

Keywords: Stochastic growth; Social status; Fiscal policies; Interest rates (search for similar items in EconPapers)
JEL-codes: E0 G1 H0 O0 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:372

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