A Simple Business-cycle Model with Schumpeterian Features
AbstractWe develop a dynamic general equilibrium model of imperfect competition where a sunk cost of creating a new product regulates the type of entry that dominates in the economy: new products or more competition in existing industries. Considering the process of product innovation is irreversible, introduces hysteresis in the business cycle. Expansionary shocks may lead the economy to a new ‘prosperity plateau,’ but contractionary shocks only affect the market power of mature industries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2005/16.
Date of creation: 2005
Date of revision:
Contact details of provider:
Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC
Entry; Hysteresis; Mark-up.;
Other versions of this item:
- Costa, Luís F. & Dixon, Huw, 2007. "A Simple Business-Cycle Model with Shumpeterian Features," Cardiff Economics Working Papers E2007/28, Cardiff University, Cardiff Business School, Economics Section.
- Luis F. Costa & Huw D. Dixon, 2007. "A Simple Business-Cycle Model with Schumpeterian Features," Money Macro and Finance (MMF) Research Group Conference 2006 105, Money Macro and Finance Research Group.
- Luis F Costa & Huw D Dixon, . "A Simple Business-Cycle Model with Schumpeterian Features," Discussion Papers 05/30, Department of Economics, University of York.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-DGE-2005-10-22 (Dynamic General Equilibrium)
- NEP-ENT-2005-10-22 (Entrepreneurship)
- NEP-MAC-2005-10-22 (Macroeconomics)
- NEP-MIC-2005-10-22 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gali, J., 1991.
"Monopolistic Competition, Business Cycles and the Composition of Aggregate Demand,"
92-03, Columbia - Graduate School of Business.
- Gali Jordi, 1994. "Monopolistic Competition, Business Cycles, and the Composition of Aggregate Demand," Journal of Economic Theory, Elsevier, vol. 63(1), pages 73-96, June.
- Jordi Galí, 1993. "Monopolistic competition, business cycles and the composition of aggregate demand," Economics Working Papers 45, Department of Economics and Business, Universitat Pompeu Fabra.
- Chatterjee, Satyajit & Cooper, Russell & Ravikumar, B, 1993.
"Strategic Complementarity in Business Formation: Aggregate Fluctuations and Sunspot Equilibria,"
Review of Economic Studies,
Wiley Blackwell, vol. 60(4), pages 795-811, October.
- Satyajit Chatterjee & Russell W. Cooper & B. Ravikumar, 1993. "Strategic complementarity in business formation: aggregate fluctuations and sunspot equilibria," Working Papers 93-9, Federal Reserve Bank of Philadelphia.
- Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
- Costa, Luis F, 2001. "Can Fiscal Policy Improve Welfare in a Small Dependent Economy with Feedback Effects," Manchester School, University of Manchester, vol. 69(4), pages 418-39, September.
- Julio J. Rotemberg & Michael Woodford, 1999.
"The Cyclical Behavior of Prices and Costs,"
NBER Working Papers
6909, National Bureau of Economic Research, Inc.
- Heijdra, Ben J & van der Ploeg, Frederick, 1996. "Keynesian Multipliers and the Cost of Public Funds under Monopolistic Competition," Economic Journal, Royal Economic Society, vol. 106(438), pages 1284-96, September.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Joaquim Oliveira Martins & Stefano Scarpetta, 1999. "The Levels and Cyclical Behaviour of Mark-ups Across Countries and Market Structures," OECD Economics Department Working Papers 213, OECD Publishing.
- Heijdra, Ben J, 1998. "Fiscal Policy Multipliers: The Role of Monopolistic Competition, Scale Economies, and Intertemporal Substitution in Labour Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(3), pages 659-96, August.
- Devereux, Michael B & Head, Allen C & Lapham, Beverly J, 1996. "Monopolistic Competition, Increasing Returns, and the Effects of Government Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 233-54, May.
- Luis Costa, 2004.
"Endogenous markups and fiscal policy,"
Money Macro and Finance (MMF) Research Group Conference 2003
18, Money Macro and Finance Research Group.
- Dixon, Huw & Lawler, Phillip, 1996. " Imperfect Competition and the Fiscal Multiplier," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 219-31, June.
- Startz, Richard, 1989. "Monopolistic Competition as a Foundation for Keynesian Macroeconomic Models," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 737-52, November.
- Jean-Pierre LAFFARGUE, 1995. "A Dynamic Model of the French Economy, with Rational Expectations, Monopolistic Competition and Labour Market Bargaining," Annales d'Economie et de Statistique, ENSAE, issue 37-38, pages 465-530.
- Luís F. Costa & Huw Dixon, 2009.
"Fiscal Policy under Imperfect Competition: A Survey,"
Working Papers Department of Economics
2009/25, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Costa, Luís F. & Dixon, Huw David, 2010. "Fiscal policy under imperfect competition: A survey," Economics Discussion Papers 2010-14, Kiel Institute for the World Economy.
- Brito, Paulo & Costa, Luís F. & Dixon, Huw, 2008.
"Non-smooth Dynamics and Multiple Equilibria in a Cournot-Ramsey Model with Endogenous Markups,"
Cardiff Economics Working Papers
E2008/21, Cardiff University, Cardiff Business School, Economics Section, revised Jul 2010.
- Brito, Paulo B. & Costa, Luís F. & Dixon, Huw, 2013. "Non-smooth dynamics and multiple equilibria in a Cournot–Ramsey model with endogenous markups," Journal of Economic Dynamics and Control, Elsevier, vol. 37(11), pages 2287-2306.
- Paulo Brito & Luís Costa & Huw Dixon, 2010. "Non-Smooth Dynamics and Multiple Equilibria in a Cournt-Ramsey Model with Endogenous Markups," Working Papers Department of Economics 2010/14, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Luís Costa, 2006. "Entry and fiscal policy effectiveness in a small open economy within a Monetary Union," Portuguese Economic Journal, Springer, vol. 5(1), pages 45-65, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vitor Escaria).
If references are entirely missing, you can add them using this form.