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Variety matters

journal contribution
posted on 2023-05-18, 21:42 authored by Oscar PavlovOscar Pavlov, Weder, M
Countercyclical markups are a key transmission mechanism in many endogenous business cycle models. Yet, recent findings suggest that aggregate markups in the US are procyclical. The current model addresses this issue. It extends Galí's (1994) composition of aggregate demand model by endogenous entry and exit of firms and by product variety effects. Endogenous business cycles emerge with procyclical markups that are within empirically plausible ranges.

History

Publication title

Journal of Economic Dynamics and Control

Volume

36

Pagination

629-641

ISSN

0165-1889

Department/School

TSBE

Publisher

Elsevier Science Bv

Place of publication

Po Box 211, Amsterdam, Netherlands, 1000 Ae

Rights statement

Copyright 2011 Elsevier

Repository Status

  • Restricted

Socio-economic Objectives

Macroeconomics not elsewhere classified

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