Will the consumption externalities' effects in the Ramsey model please stand up?

According to the prior literature, in a Ramsey model, consumption externalities have no impact on steady state behavior, once labor supply is exogenous. In contrast, this paper argues that -- in the presence of technical change -- consumption externalities always affect steady state behavior, via their impact on the elasticity of marginal utility of consumption.

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Year of publication:	2011
Authors:	Wendner, Ronald
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 111.2011, 3, p. 210-212
Publisher:	Elsevier
Keywords:	Consumption externality Keeping up with the Joneses Ramsey model Intertemporal elasticity of substitution

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009218914