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Firms' entry, monetary policy and the international business cycle

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  • Cavallari, Lilia

Abstract

This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 91 (2013)
Issue (Month): 2 ()
Pages: 263-274

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Handle: RePEc:eee:inecon:v:91:y:2013:i:2:p:263-274

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Firm entry; International business cycle; International comovements; Comovement puzzles; Taylor rule; Firm markups;

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References

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Citations

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Cited by:
  1. Giuseppe Fiori & Fabio Ghironi & Matteo Cacciatore, 2012. "Market Deregulation and Optimal Monetary Policy in a Monetary Union," 2012 Meeting Papers 678, Society for Economic Dynamics.
  2. Cavallari, Lilia, 2012. "Markups and Entry in a DSGE Model," MPRA Paper 41816, University Library of Munich, Germany.
  3. Cavallari, Lilia, 2013. "A note on firm entry, markups and the business cycle," Economic Modelling, Elsevier, vol. 35(C), pages 528-535.
  4. Carla La Croce & Lorenza Rossi, 2014. "Endogenous Firms Dynamics and Banking," DEM Working Papers Series 072, University of Pavia, Department of Economics and Management.
  5. Matteo Cacciatore, 2013. "Trade, Unemployment, and Monetary Policy," 2013 Meeting Papers 724, Society for Economic Dynamics.
  6. Lilia Cavallari, 2012. "Modelling Entry Costs: Does It Matter For Business Cycle Transmission?," Working Papers 0712, CREI Università degli Studi Roma Tre, revised 2012.

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