GROWTH,STAGNATION AND STATUS PREFERENCE

We show that an economy grows or stagnates depending on which of three objects people most esteem as tokens of status. If the main object of status preference is consumption, then a steady state with full employment is reached. If it is physical capital (which is a producible asset), then permanent growth with full employment occurs. However, if it is money (which is not a producible asset), stagnation with persistent unemployment arises.