Entry Dynamics, Capacity Utilisation and Productivity in a Dynamic Open Economy
AbstractThis paper analyses an open economy Ramsey model with an endogenous labour supply without capital. The technology defines an optimal firm size. Changes to the number of firms is subject to adjustment costs, so that the entry dynamics is determined endogenously. We find that there is a short run transitory productivity dynamic introduced when there is imperfect competition due to changes in capacity utilization. We are able to analyze this in different contexts, including demand and technology shocks, both anticipated and unanticipated.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 02/05.
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Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom
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Entry; capacity utilisation; adjustment costs; Ramsey.;
Other versions of this item:
- Marta Aloi & Huw D. Dixon, 2002. "Entry Dynamics, Capacity Utilisation and Productivity in a Dynamic Open Economy," CESifo Working Paper Series 716, CESifo Group Munich.
- 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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