Growth, Stagnation and Status Preference

2010

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe propose a microeconomic foundation of the multiplier effect and that of the consumption function using a dynamic optimization model that explains a shortage of aggregate demand and unemployment. We show that government purchases boost aggregate demand through a multiplier-like process but that the implication is quite different. It works through not an increase in disposable income but moderation of deflation, which makes money holding costly and stimulates consumption.

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confidence: 69%

“…7 Therefore, there is no difference in the multiplier effect between under a balanced budget and a deficit budget.…”

Section: The Consumption Function and The Multiplier Effectmentioning

confidence: 99%

A Reinterpretation of the Keynesian Consumption Function and Multiplier Effect

Murota

2010

SSRN Journal

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“…Ono (2010a) applies the model to analyse Japan's recent long‐run stagnation. Murota and Ono () find that a preference for money holdings as status is insatiable and, thus, generates persistent stagnation of the present type. Hashimoto and Ono () examine the effects of various pro‐population policies under this type of stagnation and show that they are contradictory to those under full employment.…”

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confidence: 99%

International Economic Interdependence and Exchange-rate Adjustment under Persistent Stagnation

Japanese Economic Review

2013

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Using a two‐country, two‐commodity dynamic optimization model with general homothetic preference for the commodities, this paper examines the effects of a tariff and a quota on consumption and employment in the case where persistent unemployment arises due to a liquidity trap. A trade restriction improves the current account, which causes the home currency to appreciate and harms the competitiveness of home firms. Therefore, home employment and consumption decrease while foreign employment and consumption increase. Tariff‐quota equivalence is found to be valid. Preference, technological and policy parameter changes that improve the current account in general worsen home unemployment.

“…Ono () applies this model to analyse various aspects of Japan's long‐run stagnation and economic policies under it. Murota and Ono () find that a preference for money holding as status is insatiable and, thus, generates persistent stagnation of the present type. Hashimoto and Ono () examine the effects of various pro‐population policies under this type of stagnation and show that they are opposite to those under full employment.…”

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confidence: 99%

On Persistent Demand Shortages: A Behavioural Approach

Japanese Economic Review

Ishida

2013

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We incorporate two sets of behavioural assumptions, fairness concerns and insatiable desire for money, into a dynamic optimization model to illuminate how they can generate persistent aggregate demand shortages. We obtain the conditions for persistent unemployment and temporary unemployment. Policy implications differ significantly between the two cases. A monetary expansion raises private consumption under temporary unemployment but not under persistent unemployment. A fiscal expansion may or may not increase short‐run private consumption but crowds out long‐run consumption under temporary unemployment. Under persistent unemployment, however, a fiscal expansion always increases private consumption. The “paradoxes of toil and flexibility” also appear.