Difference or ratio: Implication of status preference on stagnation

Arbeitspapier

We consider a dynamic macroeconomic model with households that regard relative affluence as social status. The measure of relative affluence can be the ratio to, or the difference from, the social average. The two specifications lead to quite different results: with the ratio specification full employment is necessarily realized, whereas with the difference specification persistent shortages of aggregate demand and employment can arise. Furthermore, using the data of an experiment of affluence comparison we empirically find that the difference specification is far more persuasive than the ratio specification. Thus, the present model provides an analytical framework for persistent stagnation.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 856

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; General Aggregative Models: Keynes; Keynesian; Post-Keynesian ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
• Subject: status ; stagnation ; unemployment ; Sozialer Status ; Erwerbstätigkeit ; Diskrete Entscheidung ; Test ; Japan

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ono, Yoshiyasu ; Yamada, Katsunori
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/92752
• Last update: 10.03.2025, 11:43 AM CET