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Product scope and endogenous fluctuations

journal contribution
posted on 2023-05-19, 01:49 authored by Oscar PavlovOscar Pavlov, Weder, M
Recent empirical evidence suggests that product creation is procyclical and it occurs largely within existing firms. Motivated by these findings, the current paper investigates the role of intra-firm product scope choice in a general equilibrium economy with oligopolistic producers. It shows that the multi-product nature of firms makes the economy susceptible to sunspot equilibria. The model is estimated via Bayesian methods. Artificial business cycles closely resemble empirically observed fluctuations with sunspots explaining a significant portion of U.S. business cycles.

History

Publication title

Review of Economic Dynamics

Volume

24

Pagination

175-191

ISSN

1094-2025

Department/School

TSBE

Publisher

Academic Press Inc Elsevier Science

Place of publication

525 B St, Ste 1900, San Diego, USA, Ca, 92101-4495

Rights statement

© 2017 Elsevier Inc

Repository Status

  • Restricted

Socio-economic Objectives

Macroeconomics not elsewhere classified

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