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Product scope and endogenous fluctuations

Citation

Pavlov, O and Weder, M, Product scope and endogenous fluctuations, Review of Economic Dynamics pp. 175-191. ISSN 1094-2025 (2017) [Refereed Article]


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DOI: doi:10.1016/j.red.2017.01.006

Abstract

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.

Item Details

Item Type:Refereed Article
Keywords:Indeterminacy; Sunspot equilibria; Multi-product firms; Business cycles; Bayesian estimation
Research Division:Economics
Research Group:Applied Economics
Research Field:Macroeconomics (incl. Monetary and Fiscal Theory)
Objective Division:Economic Framework
Objective Group:Macroeconomics
Objective Field:Macroeconomics not elsewhere classified
Author:Pavlov, O (Dr Oscar Pavlov)
ID Code:114378
Year Published:2017
Deposited By:Tasmanian School of Business and Economics
Deposited On:2017-02-14
Last Modified:2017-02-15
Downloads:0

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