Heterogeneous Conformism and Wealth Distribution in a Neoclassical Growth Model

Abstract

This paper explores the role of consumption externalities in a neoclassical growth model in which households have heterogeneous preferences. We find that a higher degree of average conformism accelerates the convergence speed of the economy towards the steady state as in the case of homogeneous conformism. Furthermore, we reveal that the wealth inequality expands or shrinks in the case of heterogeneous conformism, while it does not expand but shrinks in the case of homogeneous conformism.