Chen, Hung-Ju (2011): Social Status, Human Capital Formation and the Long-run Effects of Money.
Download (253kB) | Preview
This study examines the effects of monetary policy in a two-sector cash-in-advance economy of human capital accumulation. Agents concern about their social status represented by the relative physical capital and relative human capital. We find that if the desire for social status depends only on relative physical capital, money is superneutral in the growth-rate sense. However, if the desire for social status depends on relative human capital, the money growth rate will have a positive effect on the long-run economic growth rate. Furthermore, an increase in the desire to pursue human capital will raise the long-run growth rate, but an increase in the desire to pursue physical capital will lower it.
|Item Type:||MPRA Paper|
|Original Title:||Social Status, Human Capital Formation and the Long-run Effects of Money|
|Keywords:||Cash-in-advance economy; Endogenous growth; Social status.|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O42 - Monetary Growth Models
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium
|Depositing User:||Hung-Ju Chen|
|Date Deposited:||18. Apr 2011 12:49|
|Last Modified:||31. Dec 2015 18:38|
Abel, A.B. (1985), “Dynamic behavior of capital accumulation in a cash-in-advance model,” Journal of Monetary Economics 16, 55-71. Bakshi, G.S. and Z. Chen (1996), “The spirit of capitalism and stock-market prices,” American Economic Review 86, 133-157. Chang, W.Y., Y.A. Chen and M.R. Kao (2008), “Social status, Education and Government Spending in a Two-Sector Model of Endogenous Growth,” Japanese Economic Review 59, 99-112. Chang, W.Y., Y.N. Hsieh and C.C. Lai (2000), “Social status, inflation and endogenous growth in a cash-in-advance economy,” European Journal of Political Economy 16, 535-545. Chang, W.Y. and H.F. Tsai (2003), “Money, social status, and capital accumulation in a cash-in-advance model: a comment,” Journal of Money, Credit and Banking 35, 657-661. Chang, W.Y., H.F. Tsai and C.C. Lai (2004), “Taxation, growth and the spirit of capitalism,” European Journal of Political Economy 20, 1011-1025. Chen, H.J. (2011a), “Social status, human capital formation and superneutrality in a two-sector monetary economy,” Economic Modelling, forthcoming. Chen, H.J. (2011b), “Social status and long-run effects of monetary policy in a two-sector monetary economy of endogenous growth,” Mathematical Social Sciences, vol. 61: 71-79. Chen, H.J. and J.T. Guo (2009), “Social status and the growth effect of money,” Japanese Economic Review 60, 133-141. Chen, H.J. and J.T. Guo (2011), “Money, social status and endogenous growth in a generalized cash-in-advance model,” Pacific Economic Review, forthcoming. Clemens, C. (2004), “Status, risk-taking and intertemporal substitution in an endogenous growth model,” Journal of Economics 2, 103-123. Cole, H.L., G.T. Mailath and A. Postlewaite (1992), “Social norms, savings behavior, and growth,” Journal of Political Economy 100, 1092-1125. Corneo, G. and O. Jeanne (1997a), “Conspicuous consumption, snobbism and conformism,” Journal of Public Economics 66, 55-71. Corneo, G. and O. Jeanne (1997b), “On relative wealth effects and the optimality of growth,” Economics Letters 54, 87-92. Featherman, D.L. and G. Stevens (1982), “A revised socioeconomic index of occupational status: application in analysis of sex differences in attainment,” in Social Structure and Behavior: Essays in Honor of William Hamilton Sewell, edited by R.M. Hauser et al. New York: Academic Press. Fershtman, C. and Y. Weiss (1993), “Social status, culture and economic performance,” Economic Journal 103, 946-959. Fershtman, C., K.M. Murphy and Y. Weiss (1996), “Social status, education, and growth,” Journal of Political Economy 104, 108-132. Fisher, W.H. and F.X. Hof (2005), “Status seeking in the small open economy,” Journal of Macroeconomics 27, 209-232. Gong, L. and H.F. Zou (2001), “Money, social status, and capital accumulation in a cash-in-advance model,” Journal of Money, Credit and Banking 33, 284-293. Kurz, M. (1968), “Optimal economic growth and wealth effects,” International Economic Review 9, 348-357. Lucas, R.E. (1988), “On the mechanics of economic development,” Journal of Monetary Economics 22, 3-42. Marquis, M.H. and K.L. Reffett (1991), “Real interest rates and endogenous growth in a monetary economy,” Economics Letters 37, 105-109. Rauscher, M. (1997), “Conspicuous consumption, economic growth, and taxation,” Journal of Economics 66, 35-42. Sidrauski, M. (1967), “Rational choice and patterns of growth in a monetary economy,” American Economic Review Papers and Proceedings 57, 534-544. Stockman, A.C. (1981), “Anticipated inflation and the capital stock in a cash-in-advance economy,” Journal of Monetary Economics 8, 387-393. Suen, M.H. and C.K. Yip (2005), “Superneutrality, indeterminacy and endogenous growth,” Journal of Macroeconomics 27, 579-595. Tobin, J. (1965), “Money and economic growth,” Econometrica 33, 671-684. Weber, M. (1958), The protestant ethic and the spirit of capitalism. Charles Scribner’s Sons, New York. Wirl, F. (1994), “The Ramsey model revisited: the optimality of cyclical consumption and growth,” Journal of Economics 60, 81-98. Zou, H.F. (1994), “The spirit of capitalism and long-run growth,” European Journal of Political Economy 10, 279-293.