Barnett, Richard C.; Bhattacharya, Joydeep

European Economic Review Vol. 52 no. 6 (August 2008): 1055-1071. (Originally published as WP #06026, August 2006)

Rejuveniles are "grown-ups who cultivate juvenile tastes in products and entertainment". In this note, we study a standard AK growth model of overlapping generations populated by rejuveniles. For our purposes, rejuveniles are old agents who derive utility from "keeping up" their consumption with that of the current young. We find that such cross-generational keeping up is capable of generating interesting equilibrium growth dynamics, including growth cycles. No such growth dynamics is possible either in the baseline model, one where no such generational consumption externality exists, or for almost any other form of keeping up. Steady-state growth in a world with rejuveniles may be higher than that obtained in the baseline model.

JEL Classification: E13, E32

Keywords: overlapping generations, growth cycles, keeping up preferences

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