Shi, Shouyong - In: Economic Theory 14 (1999) 2, pp. 439-461
This paper examines the influence of fashion on wealth accumulation in an economy with two groups of agents. Fashion is …-capita consumption habits. It is shown that fashion causes excessive wealth fluctuations in the sense that stronger and more persistent … fashion is more likely to generate limit cycles in wealth. Opposite to intuitive arguments , however, the externality in …