"Love of Wealth" and economic growth

Arbeitspapier

This paper complements research on how love of wealth bears on key variables in a Ramsey-Cass-Koopmans growth framework. It is shown that for an optimum the social planner cannot have an excessive love of wealth. If the planner has the right love of wealth an optimum exists and implies higher long-run per capita capital, income and consumption relative to the standard optimal growth model. The optimum implies dynamic efficiency with the possibility to get arbitrarily close to the Golden Rule where long-run per capita consumption is maximal. It is shown that the optimal path is attaining its steady state more slowly. Thus, the beneficial effects of love of wealth materialize later than in the standard model. Furthermore, the economy can be decentralized as a competitive private ownership economy. One can then identify love of wealth with the spirit of capitalism. The paper, hence, implies that one needs a right level of the spirit of capitalism to realize any beneficial effects for the long run.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Darmstadt Discussion Papers in Economics ; No. 209

Classification and Topics

• Classification: Wirtschaft ; One, Two, and Multisector Growth Models
• Subject: Economic Growth ; Love of Wealth ; Preference Shifts ; Vermögen ; Reichtum ; Nutzen ; Investition ; Wachstumstheorie ; Steady-State-Wachstum ; Soziale Wohlfahrtsfunktion ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rehme, Günther
• Event: Veröffentlichung
• (who): Technische Universität Darmstadt, Department of Law and Economics
• (where): Darmstadt
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/84872
• Last update: 10.03.2025, 11:45 AM CET