Bandwagon effects and time lags help to explain why booms and recessions can persist.

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Bandwagon effects can lead to herding behavior in markets, where individuals follow the actions of others, amplifying trends and leading to persistent booms or recessions. Time lags in the effects of monetary and fiscal policies, as well as in the adjustments of markets and expectations, can also cause these economic cycles to persist longer than they might otherwise.

Bandwagon Effects and Time Lags Help to Explain Why Booms