A BEJM Topics article.

Abstract

This paper introduces a signalling model of conspicuous consumption in the context of an endogenous growth model. Agents purchase luxury goods to signal their social status. 'Invidious Comparison' takes place when rich agents successfully identify themselves, whereas 'Pecuniary Emulation' takes place when some poor agents succeeded in emulating the rich. Demand for new design is created during 'Pecuniary Emulation' as rich agents seek to purchase a good of superior quality in order to distinguish themselves from the poor. The growth process is characterized by creative destruction, and the economy is shown to switch between 'Invidious Comparison' and 'Pecuniary Emulation' along the growth path.

Submitted: November 11, 2005 · Accepted: March 6, 2006 · Published: May 13, 2006

Originally published in Topics in Macroeconomics.

Recommended Citation

Peng, Baochun (2006) "A Model of Veblenian Growth," Topics in Macroeconomics: Vol. 6 : Iss. 1, Article 11.
Available at: http://www.bepress.com/bejm/topics/vol6/iss1/art11