time framework, the stock of consumer durables corresponds to:
√
- -∞
eδ(τ t)c(τ )rfιτ
(2.1a)
and accumulates according to:
a = c — δa
(2.1b)
where δ is the rate of depreciation of consumer durables.7 We specify that each agent pos-
sesses the following general instantaneous utility function over own durable consumption,
c + a, and status, s, and work effort I:
U (c + a,s) + V (Z),
(2.2)
where U and V have the following properties:
Uc > 0, Us > 0, Ucc < 0, Uss ≤ 0, UccUss — U7cs ≥ 0, V' < 0, V'' < 0,
(2.3a)
UscUc — UsUcc > 0,
(2.3b)
lim Uc(c, s) = ∞, lim Uc(c, s) = 0.
c→0 c→∞
(2.3c)
According to (2.3a), the representative agent derives positive, though diminishing, mar-
ginal utility from own consumption and positive and non-increasing marginal utility from
status, with the instantaneous utility function U jointly concave in c and s.8 In addition,
work effort generates disutility and V is concave. The condition (2.3b) imposes normality
on preferences, i.e., the marginal rate of substitution of status for consumption, Us∣Uc, de-
7This specification of durable consumption is found in Mansoorian (1998, 2000).
8We use the following notational conventions. In general, we suppress a variable’s time dependence,
i.e., x ≡ x(t). The time derivative of x will be denoted by x; a steady-state value by x. Unless otherwise
indicated, the partial derivative of a function F with respect to x will be denoted by Fx, while “primes”
indicate that the derivative of a function of a single variable is being taken.
More intriguing information
1. Plasmid-Encoded Multidrug Resistance of Salmonella typhi and some Enteric Bacteria in and around Kolkata, India: A Preliminary Study2. Are Public Investment Efficient in Creating Capital Stocks in Developing Countries?
3. The name is absent
4. Work Rich, Time Poor? Time-Use of Women and Men in Ireland
5. Skill and work experience in the European knowledge economy
6. The name is absent
7. The name is absent
8. 101 Proposals to reform the Stability and Growth Pact. Why so many? A Survey
9. Knowledge, Innovation and Agglomeration - regionalized multiple indicators and evidence from Brazil
10. A Duality Approach to Testing the Economic Behaviour of Dairy-Marketing Co-operatives: The Case of Ireland