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Lumpy consumer durables, market power, and endogenous business cycles

  • Kala Krishna
  • Cemile Yavas

In this paper we show that lumpy consumer durables and market power can generate endogenous cycles consistent with the facts. Past sales determine the current market size of durable goods. Larger past sales, ceteris paribus, thus naturally result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 37 (2004)
Issue (Month): 2 (May)
Pages: 375-391

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Handle: RePEc:cje:issued:v:37:y:2004:i:2:p:375-391
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