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Consumption Taxation, Social Status and Indeterminacy in Models of Endogenous Growth with Elastic Labor Supply

Author

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  • Itaya, Jun-ichi
  • Kanamori, Naoshige

Abstract

This paper examines the effects of consumption taxation on longrun growth in an infinity-lived representative agent model of endogenous growth in which the desire for social status induces private agents to care about others’ wealth or consumption levels. We also allow for nonseparable preferences in own consumption, labor supply and social status that may cause indeterminacy of equilibrium. This analysis shows that consumption taxation generally raises (reduces) a long-run growth rate when the balanced growth path is indeterminate (determinate) in the models of wealth-induced social status and consumption externalities.

Suggested Citation

  • Itaya, Jun-ichi & Kanamori, Naoshige, 2008. "Consumption Taxation, Social Status and Indeterminacy in Models of Endogenous Growth with Elastic Labor Supply," Discussion paper series. A 199, Graduate School of Economics and Business Administration, Hokkaido University.
    • Handle: RePEc:hok:dpaper:199
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    File URL: http://hdl.handle.net/2115/32614
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    File URL: https://eprints.lib.hokudai.ac.jp/dspace/bitstream/2115/32614/1/DPA199.pdf
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    More about this item

    Keywords

    Social Status; Endogenous Growth; Consumption Externality; Indeterminacy; Consumption Taxation; Endogenous Labor Supply; D62; D90; E62; O40; P10;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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