Comment on "Productive Public Expenditure and Imperfect Competition with Endogenous Price Markup"
AbstractIn this note we show that the claim from Chen et al (2005) that their model generates an endogenous markup is incorrect. This is not only a nomenclature issue: using the �fixed markup which we show to be the only one consistent with the structure of the model implies the main conclusions in that paper do not hold. In particular, government expenditure in infrastructure cannot affect the business cycle in this model by deliberately changing the market structure of the economy.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5143.
Date of creation: 16 Oct 2006
Date of revision: 08 Jun 2007
Other versions of this item:
- Luís F. Costa & Nuno Palma, 2006. "Productive Public Expenditure and Imperfect Competition with Endogenous Price Markup: Comment," Working Papers Department of Economics 2006/24, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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