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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. Anthony Savagar, 2017. "Firm Dynamics, Dynamic Reallocation, Variable Markups, and Productivity Behaviour," Studies in Economics 1713, School of Economics, University of Kent.
    2. Huw Dixon & ANTHONY SAVAGAR, 2017. "The Effect of Firm Entry on Capacity Utilization and Macroeconomic Productivity," 2017 Meeting Papers 1130, Society for Economic Dynamics.

    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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