Consumption externalities and growth: Theory and evidence for the United States

Petach, Luke; Tavani, Daniele

doi:10.1016/j.jebo.2019.02.021

Cited by 19 publications

(23 citation statements)

References 28 publications

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“…Our model differs from these contributions by grounding differential savings rates in the prevalence of other-regarding preferences, which increase consumption and reduce savings and wealth accumulation, at the lower end of the income distribution. In line with the evidence we presented in Petach and Tavani (2018), workers' preferences are assumed to be negatively affected by the average consumption of other workers, 1 motivating increases in consumption through expenditure cascades, external habits or "keeping up with the Joneses" behavior. Conversely, and backed by the empirical evidence, top income earners' consumption appears not to be affected by peer consumption.…”

Section: Introductionsupporting

confidence: 63%

“…The literature has downplayed the effect of consumption externalities in dynamic optimization models. InPetach and Tavani (2018), we argued that a proper account of such externalities requires to consider their dynamic effects also, and that CEX data supports this hypothesis. Such considerations are crucial in order to obtain equation (5).…”

mentioning

confidence: 84%

“…The difference between the two classes is in their respective instantaneous preferences. Empirical evidence using Consumer Expenditure Survey data from the United States suggests that consumption peer effects are large-over 30% in magnitude-for the bottom quintiles of the income distribution, but vanish as top income earners are considered (Petach and Tavani, 2018). Thus, we assume that, while capitalists derive (logarithmic, for simplicity) utility from their own consumption c c , workers have (logarithmic, again) preferences that reflect so-called "external habits", or their intent to "keep up with the Joneses" (Ljunqvist and Uhlig, 2000;Turnovsky et al, 2004;Dynan and Ravina, 2007;Alvarez-Cuadrado and Van Long, 2011):…”

Section: Economic Classes and Preferencesmentioning

confidence: 99%

“…Second, we parameterize η = .0625 so as to obtain a labor productivity growth rate of 2.5%-about the average labor productivity growth rate up to 1980. Third, we use the estimates presented in Petach and Tavani (2018) to parameterize the extent of consumption externalities θ at .32. Fourth, noting that the average top wealth share between 1950…”

Section: Parameter Calibrationmentioning

confidence: 99%

See 3 more Smart Citations

Income shares, secular stagnation and the long‐run distribution of wealth

Petach

Tavani

2019

Metroeconomica

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Section: Introductionsupporting

confidence: 63%

mentioning

confidence: 84%

Section: Economic Classes and Preferencesmentioning

confidence: 99%

Section: Parameter Calibrationmentioning

confidence: 99%

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Income shares, secular stagnation and the long‐run distribution of wealth

Petach

Tavani

2019

Metroeconomica

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“…The discussion of consumption activities often ignores externalities. Externality is a side effect of a certain party's actions towards another party, both beneficial and adverse (Petach & Tavani, 2019). Externalities occur only when the actions of a party have an impact on another party without compensation.…”

Section: Introduction 11 Backgroundmentioning

confidence: 99%

The Impact of Halal at Thayyib and Consumption Ethics Impact on Economic Growth: An Economic Tafsir Al-Baqarah:168

Insani¹,

Al-Faizin²,

Ryandono³

2019

JIMF

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This study investigates the contribution of Islamic banks and Islamic windows to thegrowth of the Nigerian economy. Data were obtained using structured questionnaires.379 copies of questionnaires were administered based on the sample size obtainedvia the use of Taro Yamane formula. 367 questionnaires were successfully retrieved.Variables such as deposit activities, loan activities, and perception of bank employeeswere also adopted as explanatory or independent variable and dependent variablerespectively. To support the study hypothesis were also formulated. For the analysis,measures of central tendency (tables, frequency and percentages) and inferentialstatistics (Logit Regression) were used. The result revealed that the variables (i.e.deposit and loan activities) have a positive impact on the growth of Nigeria’s economybecause the probability values of the variables (P=0.003 and 0.019) were less thanalpha (α =0.05) level of significance. In other words, this implies that Islamic banksand windows have largely supported private consumption, business investments of itscustomers, aid government spending via sharia bonds (sukuk) to fund developmentalprojects of its customers. The study concludes that Islamic banks and windows havecontributed towards the growth of the Nigeria’s economy. Furthermore, the studyrecommends that there is need for creating the necessary legal framework to ensureits smooth operations, intensify efforts on creating public awareness, rolling out moresharia compliant products that can take care of the peculiarities that exist in businessenvironment and training and retraining of staff on effective Islamic banking.

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Does Digital Finance Upgrade Trickle-down consumption effect in China?

Zhou¹,

Sun²,

2023

Economic Modelling

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Consumption externalities and growth: Theory and evidence for the United States

Cited by 19 publications

References 28 publications

Income shares, secular stagnation and the long‐run distribution of wealth

Income shares, secular stagnation and the long‐run distribution of wealth

The Impact of Halal at Thayyib and Consumption Ethics Impact on Economic Growth: An Economic Tafsir Al-Baqarah:168

Does Digital Finance Upgrade Trickle-down consumption effect in China?

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