DURABLE CONSUMPTION AS A STATUS GOOD: A STUDY OF NEOCLASSICAL CASES



where ω = 1 4 are the eigenvalues of J.11 The condition tr (J) > 0 rules out the case of
four negative eigenvalues, while det (
J) > 0 implies that the following cases do not obtain:
i) one negative and three positive eigenvalues; and ii) three negative and one positive
eigenvalue. This leaves the cases that are not ruled-out by
tr (J) > 0 and det (J) > 0: i)
two negative and two positive eigenvalues; and ii). four positive eigenvalues. To determine
which of the two cases holds, we use the fact that the characteristic equation, denoted by
det (
Jωl) = 0, can be factored as:

det (Jωl) = (ω ωι)(ω ω2)(ω ω3)(ω ω4)

= ω4 tr (J) ω3 + (ω1ω2 + ω1ω3 + ω1ω4 + ω2ω3 + ω2ω4 + ω3ω4) ω2

(ω1ω2ω3 + ω1ω2ω4 + ω1ω3ω4 + ω2ω3ω4) ω + det (J) = 0.         (2.16a)

Calculating det (Jωl) from (2.15), we hnd:

det (Jωl) =

ω"' tr (J) ω3 + {β2 (1 + δX1 + β + δ) [cμM (Fkk + Fkklk) lμβFkk (у/Г)] } ω^
{(1 + δ)(1 + β + δ) + [cμμ (Fkk + Fkklk) lμμFkk (у/l)] } ω + det (J) = 0.

(2.16b)

Matching the coefficients of (2.16a, b), we observe that:

ω1ω2ω3 + ω1ω2ω4 + ω1ω3ω4 + ω2ω3ω4

= β {(1 + δ)(1 + β + δ) + [cμμ (Fkk + Fkklk) lμβFkk (r∕r)] } < 0,

11In calculating tr(J) = 2β, we substitute for lμ and Z⅛ in the expression for tr(J). In deriving det J > 0,

we use the fact that

Fkk + Fkllk = Fkk -


FkkV "
V '' + μFu


< 0,


1 -I J ∙ J J 2     2 T~<       T~2       1∕T-O T-I T-Ih         T-I ∕~∕τh

and substitute for FkkFii = Fm and (Fkiβ FkkFi) = —Ffefe(y∕l).

10



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