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Entry Dynamics, Demand Shocks and Induced Productivity Fluctuations

Author

Listed:
  • Marta Aloi

    (School of Economics, University of Nottingham, Nottingham NG7 2RD, UK)

  • Huw Dixon

    (University of York, York, YO1 5DD, UK. Also member of CESifo (Munich))

Abstract

This paper analyses a small open economy Ramsey model with an endogenous labor supply and no capital. The number of firms is subject to adjustment costs, so that the entry dynamics is determined endogenously. We find that with imperfect competition, there is a first order effect of a demand shock which is absent in the Walrasian equivalent. We solve and analyse the dynamic model for permanent and temporary demand shocks.

Suggested Citation

  • Marta Aloi & Huw Dixon, 2003. "Entry Dynamics, Demand Shocks and Induced Productivity Fluctuations," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 6(2), pages 115-146, Winter.
    • Handle: RePEc:ekn:ekonom:v:6:y:2003:i:2:p:115-146
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    Citations

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    Cited by:

    1. Savagar, Anthony & Dixon, Huw, 2020. "Firm entry, excess capacity and endogenous productivity," European Economic Review, Elsevier, vol. 121(C).
    2. Savagar, Anthony, 2021. "Measured productivity with endogenous markups and economic profits," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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