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Optimal Stabilization with Endogenous Firm Entry

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  • Christopher Waller

    (University of Notre Dame and FRB-St. Louis)

Abstract

a¤ecting firm entry, the central bank deviates from the Friedman rule. Calibration ex-ercises suggest that the nominal interest rate should have been substantially smoother than the data if preference shocks were the main disturbance and much more volatile if productivity was the driving shock. This result is a direct consequence of policy actions to control entry.

Suggested Citation

  • Christopher Waller, 2009. "Optimal Stabilization with Endogenous Firm Entry," 2009 Meeting Papers 621, Society for Economic Dynamics.
  • Handle: RePEc:red:sed009:621
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    File URL: https://economicdynamics.org/meetpapers/2009/paper_621.pdf
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    References listed on IDEAS

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    8. Jaimovich, Nir & Floetotto, Max, 2008. "Firm dynamics, markup variations, and the business cycle," Journal of Monetary Economics, Elsevier, vol. 55(7), pages 1238-1252, October.
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    Cited by:

    1. Stephen D. Williamson & Randall Wright, 2010. "New monetarist economics: methods," Review, Federal Reserve Bank of St. Louis, issue May, pages 265-302.

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