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Competitive conspicuous consumption, household saving and income inequality

Walther, Herbert (2004) Competitive conspicuous consumption, household saving and income inequality. Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness", 40. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.

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Abstract

An intertemporal decision model is presented in which subjects save less for retirement than the permanent income hypothesis predicts, signaling optimistic income prospects (and therefore high latent productivity) to possible partners in productive exchanges. Competitive conspicuous consumption (CCC), as it is called, is a self-defeating strategy, if followed by subjects simultaneously. Egalitarian policies (which have to be distinguished from pure welfare policies) tend to lower excess consumption. The CCC-hypothesis justifies a cross-sectional Keynesian consumption function with declining marginal propensities to consume. It is argued that the cultural context is highly relevant to the scope and importance of CCC. (author's abstract)

Item Type: Paper
Keywords: Verbraucherverhalten / Geltungsbedürfnis / Sparverhalten / Einkommensunterschied / Mehr-Perioden-Modell
Classification Codes: JEL D9, E2
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 30 Sep 2004 13:36
Last Modified: 24 Feb 2016 14:35
URI: http://epub.wu.ac.at/id/eprint/1116

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