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Endogenous product scope: market interlacing and aggregate business cycle dynamics


Pavlov, O and Weder, M, Endogenous product scope: market interlacing and aggregate business cycle dynamics, European Economic Review, 148 Article 104243. ISSN 0014-2921 (2022) [Refereed Article]


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Copyright 2022 The Author(s) Licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0)

DOI: doi:10.1016/j.euroecorev.2022.104243


This paper examines a market interlacing industry configuration in general equilibrium with multi-product firms. In contrast to previous studies which utilize market segmentation, firms produce multiple products even in the complete absence of the love of variety. Product scopes are procyclical and entry and exit of firms generates an endogenous amplification mechanism. When simulated by shocks derived from the efficiency and labor wedges, the model replicates the changes in dynamics between the pre- and post 1983 periods, and explains the hours-productivity puzzle.

Item Details

Item Type:Refereed Article
Keywords:multi-product firms, business cycles
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
UTAS Author:Pavlov, O (Dr Oscar Pavlov)
ID Code:151725
Year Published:2022
Deposited By:Economics
Deposited On:2022-08-03
Last Modified:2022-09-02
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