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‘Love of Wealth’ and Economic Growth

Rehme, Günther (2011):
‘Love of Wealth’ and Economic Growth.
209In: Darmstadt Discussion Papers in Economics, Darmstadt, [Online-Edition: http://econstor.eu/bitstream/10419/84872/1/681260254.pdf],

Item Type: Report
Erschienen: 2011
Creators: Rehme, Günther
Title: ‘Love of Wealth’ and Economic Growth
Language: English
Series Name: Darmstadt Discussion Papers in Economics
Volume: 209
Place of Publication: Darmstadt
Divisions: 01 Department of Law and Economics
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 22 Dec 2011 08:41
Official URL: http://econstor.eu/bitstream/10419/84872/1/681260254.pdf
Additional Information:

JEL classification: O41

Alternative keywords:
Alternative keywordsLanguage
Economic Growth, Love of Wealth, Preference ShiftsEnglish
Alternative Abstract:
Alternative abstract Language
This paper complements research on how love of wealth bears on key variables in a Ramsey-Cass-Koopmans growth framework. It is shown that for an optimum the social planner cannot have an excessive love of wealth. If the planner has the ‘right’ love of wealth an optimum exists and implies higher long-run per capita capital, income and consumption relative to the standard optimal growth model. The optimum implies dynamic efficiency with the possibility to get arbitrarily close to the Golden Rule where long-run per capita consumption is maximal. It is shown that the optimal path is attaining its steady state more slowly. Thus, the beneficial effects of love of wealth materialize later than in the standard model. Furthermore, the economy can be decentralized as a competitive private ownership economy. One can then identify love of wealth with the “spirit of capitalism”. The paper, hence, implies that one needs a ’right’ level of the “spirit of capitalism” to realize any beneficial effects for the long run.English
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