Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model: A Comment

Chang, Wen‐Ya; Tsai, Hsueh-fang

doi:10.1353/mcb.2003.0027

Cited by 14 publications

(18 citation statements)

References 5 publications

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“…They examine how status has an impact on the effect of higher inflation (money growth) on the level of capital stock or on an economic growth rate, which has been one of the important issues in macroeconomics. Gong and Zou (2001) and Chang and Tsai (2003) deal with this issue in a neoclassical framework, while Chang et al (2000) and Guo (2009, 2011) tackle this issue in an AK framework. 2 In particular, concerning the AK model, Chang et al (2000) employ the Clower-Lucas-type CIA constraint and show that an endogenous growth rate and money growth are positively correlated.…”

Section: Introductionmentioning

confidence: 99%

Cash-in-Advance Constraint With Status and Endogenous Growth

Kaminoyama

Kawagishi

2017

Macroecon. Dynam.

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This paper explores a one-sector AK model with a cash-in-advance (CIA) constraint that itself depends on relative income, which implies status (we call this constraint the "CIA-status constraint"). The CIA-status constraint means that agents with higher income are more creditworthy and can make purchases with fewer money holdings. Under the Clower-Lucas-type CIA-status constraint, we show that the endogenous growth rate and money growth are positively correlated. On the other hand, under the Stockman-type CIA-status constraint, we confirm that the relationship between the endogenous growth rate and money growth changes from negative to positive when the elasticity of the CIA constraint with respect to status exceeds one.

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Section: Introductionmentioning

confidence: 99%

Cash-in-Advance Constraint With Status and Endogenous Growth

Kaminoyama

Kawagishi

2017

Macroecon. Dynam.

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“…The way that social status are integrated into our trade model is influenced by the literature that studies the macroeconomic effects of consumers' wealth-induced preferences for social status. In this literature social status is considered as functions of private wealth within neoclassical growth models (Zou, 1994(Zou, , 1995Bakshi and Chen, 1996;Chang, 2006;Chang and Tsai, 2003;Corneo and Jeanne, 2001;Chang, et al 2004;Clemens, 2004;Fisher and Hof, 2005;Guo, 2009, 2011). We introduce this idea to a multi-country growth model with endogenous physical capital and wealth accumulation.…”

Section: Introductionmentioning

confidence: 99%

Spirit of Capitalism and Conspicuous Consumption with Social Status in a Neoclassical Growth Trade Model

zhang¹

2016

BER

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This study deals with dynamic interactions among social status, conspicuous consumption, spirit of capitalism, global growth, trade patterns, and inequalities in income and wealth between countries. The paper constructs a multi-country growth model with endogenous physical capital, wealth accumulation and social status. The modelling of social status is influenced by the ideas related to economic growth and social status in the literature of economic growth. This study analyzes the role of conspicuous consumption by assuming that social status is enhanced by more consumption and the role of the spirit of capitalism (of some goods) by assuming that social status is enhanced by more wealth. The global economic system consists of any number of countries and each country has one capital goods sector and one consumer goods sector. This study applies an alternative utility function proposed by Zhang to analyze household behavior. The countries differ in preferences, spirits of capitalisms, and productivities. We show that the dynamics of J -country world economy is described by J differential equations. We simulate the motion of the model with three countries and carry out comparative dynamic analysis with regard to some parameters.

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“…1 Stockman (1981) develops a cash-in-advance (CIA) model where both consumption and investment are liquidity constrained and shows that an increase in the money growth rate will lower the steady-state value of physical capital. 2 Social status is introduced into a CIA model by Gong and Zou (2001), Chang et al (2000Chang et al ( , 2003 and Chen and Guo (2009) in order to study how wealth-enhanced social status affects the impact of monetary policy on economic growth. 3 Gong and Zou (2001) and Chang et al (2000Chang et al ( , 2003 demonstrate that with the presence of social status, the money growth 1 However, Sidrauski (1967) argues that in an infinite-horizon, representative-agent model, money growth does not affect the steady-state value of physical capital.…”

Section: Introductionmentioning

confidence: 99%

“…2 Social status is introduced into a CIA model by Gong and Zou (2001), Chang et al (2000Chang et al ( , 2003 and Chen and Guo (2009) in order to study how wealth-enhanced social status affects the impact of monetary policy on economic growth. 3 Gong and Zou (2001) and Chang et al (2000Chang et al ( , 2003 demonstrate that with the presence of social status, the money growth 1 However, Sidrauski (1967) argues that in an infinite-horizon, representative-agent model, money growth does not affect the steady-state value of physical capital. 2 Based on a CIA model, Abel (1985) shows that monetary policies will not affect the steady-state value of physical capital if the cash-in-advance constraint is applied solely to consumption.…”

Section: Introductionmentioning

confidence: 99%

Social status, human capital formation and the long-run effects of money

Chen

2011

J. Econ.

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This study examines the effects of monetary policy in a two-sector cash-in-advance economy of human capital accumulation. Agents concern about their social status represented by the relative physical capital and relative human capital. We find that if the desire for social status depends only on relative physical capital, money is superneutral in the growth-rate sense. However, if the desire for social status depends on relative human capital, the money growth rate will have a positive effect on the long-run economic growth rate. Furthermore, an increase in the desire to pursue human capital will raise the long-run growth rate, but an increase in the desire to pursue physical capital will lower it.

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Money, Social Status, and Capital Accumulation in a Cash-in-Advance Model: A Comment

Cited by 14 publications

References 5 publications

Cash-in-Advance Constraint With Status and Endogenous Growth

Cash-in-Advance Constraint With Status and Endogenous Growth

Spirit of Capitalism and Conspicuous Consumption with Social Status in a Neoclassical Growth Trade Model

Social status, human capital formation and the long-run effects of money

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