SFB 303 Discussion Paper No. A - 497

Author: Corneo, Giacomo, and Olivier Jeanne
Title: Status-Seeking Can Generate Long-Run Growth in the Solow-Cass Model
Abstract: A desire for social status may lead individuals to care about their relative wealth. We prove that the presence of a desire for status, even if very limited, can generate endogenous growth in the Solow-Cass model. Hence status-seeking my be seen as an engine of economic growth. When the status-seeking motive is small, long-run growth only appears if the initial stock of capital is large enough, i.e. the long-term behavior of the economy depends on its initial conditions.
Keywords: long-run growth, capital accumulation, status-seeking behavior
JEL-Classification-Number: O40, O41
Creation-Date: November 1995
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