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

No 2020-01, Graz Economics Papers from University of Graz, Department of Economics

Abstract: Based on an endogenous growth model, this paper characterizes the conditions under which positional preferences do not give rise to intertemporal distortions as well as derives an optimal tax policy response in cases where these conditions are not satisfied. In our model, individuals can be positional both in terms of their consumption and wealth, the relative concerns partly reject comparisons with people in other countries, and we distinguish between a (conventional) welfarist government and a paternalist government that does not respect positional preferences. We also extend the analysis to a multi-country framework and show that Nash-competition among local paternalist governments leads to a global social optimum, whereas Nash-competition among local welfarist governments does not.

Keywords: Positional preferences; efficiency; intertemporal distortions; welfarist government; paternalist government; endogenous growth (search for similar items in EconPapers)
JEL-codes: E71 H11 O43 (search for similar items in EconPapers)
Date: 2020-02
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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 (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)
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