Economic Growth with Social Status, Spirit of Capitalism, and Conspicuous Consumption

Abstract

The purpose of this study is to introduce social status, conspicuous consumption, and spirit of capitalism into neoclassical growth model. This paper studies a dynamic interdependence between economic growth, economic structural change, income and wealth distribution, social status, conspicuous consumption, and spirit of capitalism in a small-open economy. We build a heterogeneous-households growth model with endogenous wealth accumulation and social status. The dynamics of J-households economy is described by J differential equations. We simulate the motion of the model with three groups of households. We carry out comparative dynamic analysis with regard to some parameters.