We introduce relative concerns in the form of conspicuous consumption in a standard economic geography model a la Krugman. The keeping up with the Joneses effect brings a negative externality to some agents and gives them incentives to escape. The primary intuition is then that conspicuous...

We describe a simple mechanism that generates inflation persistence in a standard sticky-price model of optimal fiscal and monetary policy. Key to this mechanism is that policies are decided under discretion. The government's discretionary incentive to erode the real value of nominal public debt...