Browsing by Subject "Long-run economic growth"

Now showing 1 - 4 of 4

Relative consumption, relative wealth, and long-run growth : when and why is the standard analysis prone to erroneous conclusions?
(2019) Prettner, Klaus; Hof, Franz X.
We employ a novel approach for analyzing the effects of relative consumption and relative wealth preferences on both the decentralized and the socially optimal economic growth rates. In the pertinent literature these effects are usually assessed by examining the dependence of the growth rates on the two parameters of the instantaneous utility function that seem to measure the strength of the relative consumption and the relative wealth motive. We go beyond the sole consideration of parameters by revealing the fundamental factors that ultimately determine long-run growth. In doing so we identify widely used types of status preferences in which the traditional approach is prone to erroneous conclusions. For example, in one of these specifications the parameter that seems to determine the strength of the relative consumption motive actually also affects the strength of the relative wealth motive and the elasticity of intertemporal substitution.
Rising longevity, increasing the retirement age, and the consequences for knowledge-based long-run growth
(2020) Prettner, Klaus; Kuhn, Michael
We assess the long-run growth effects of rising longevity and increasing the retirement age when growth is driven by purposeful research and development. In contrast to economies in which growth depends on learning-by-doing spillovers, raising the retirement age fosters economic growth. How economic growth changes in response to rising life expectancy depends on the retirement response. Employing numerical analysis we find that the requirement for experiencing a growth stimulus from rising longevity is fulfilled for the United States, nearly met for the average OECD economy, but missed by the EU and by Japan.
Robots and the skill premium : an automation-based explanation of wage inequality
(2017) Lankisch, Clemens; Prettner, Klaus; Prskawetz, Alexia
We analyze the effects of automation on the wages of high-skilled and low- skilled workers and thereby on the evolution of wage inequality. Our model explains the simultaneous presence of i) increasing per capita GDP, ii) de-clining real wages of low-skilled workers, and iii) an increasing skill-premium. These developments are consistent with the experience in the United States over the past decades and have the potential to contribute to the explanation of the rise in overall incomeinequality that we have observed since the 1980s.
The quest for status and R&D-based growth
(2016) Prettner, Klaus; Hof, Franz X.
We analyze the impact of status preferences on technological progress and long-run economic growth within an R&D-based framework. For this purpose, we extend the standard relative wealth approach by allowing the various assets held by households to differ with respect to their status relevance. Relative wealth preferences imply that the effective rate of return on saving in the form of a particular asset is the sum of its market rate of return and its status-related extra return. We show that the status relevance of shares issued by entrants to finance the purchase of new technologies is of crucial importance for long-run growth: First, an increase in the intensity of the quest for status raises the steady-state economic growth rate only if the status-related extra return of these shares is strictly positive. Second, for any given degree of status consciousness, the long-run economic growth rate depends positively on the relative status relevance of shares issued by entrants. Third, while the decentralized long-run economic growth rate is less than its socially optimal counterpart in the standard model, wealth externalities reduce this distortion.