Pavlov, Oscar & Weder, Mark (2012) Variety matters. Journal of Economic Dynamics and Control, 36(4), pp. 629-641.
Countercyclical markups are a key transmission mechanism in many endogenous business cycle models. Yet, recent findings suggest that aggregate markups in the US are procyclical. The current model addresses this issue. It extends Galí's (1994) composition of aggregate demand model by endogenous entry and exit of firms and by product variety effects. Endogenous business cycles emerge with procyclical markups that are within empirically plausible ranges.
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|Item Type:||Journal Article|
|Keywords:||Sunspot equilibria, Indeterminacy, Markups, Variety effects, Business cycles|
|Subjects:||Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Macroeconomics (incl. Monetary and Fiscal Theory) (140212)|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
|Deposited On:||19 Feb 2013 22:48|
|Last Modified:||12 Jun 2013 15:32|
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