ISSN:
1617-7134
Keywords:
social status
;
relative consumption
;
economic growth
;
D62
;
D91
;
E21
;
E62
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract This paper studies the influence of consumption externalities in the Ramsey model. In contrast to the recent literature, a quite general specification of preferences is used and the concept of the effective intertemporal elasticity of substitution is introduced. We give conditions for the observational equivalence between economies with consumption externalities and externality-free economies. An additional key result is that there exist several types of instantaneous utility functions in which the decentralized solution coincides with the socially planned one in spite of the presence of consumption externalities. The conditions for optimal taxation are also derived.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01231266
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