We introduce Cournot competition and endogenous entry in an oth- erwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of busi- ness creation. Then, we develop a model à la Ramsey describing the dynamic interaction of consumption and business creation. Our models are able to explain why markups vary countercylically and pro?ts are procyclical. The analysis of permanent and temporary technology and preference shocks and of the second moments suggests that our model can outperform the Real Business Cycle framework in many dimensions.

Colciago, A., Etro, F. (2007). Real Business Cycles with Cournot Competition and Endogenous Entry [Working paper del dipartimento].

Real Business Cycles with Cournot Competition and Endogenous Entry

COLCIAGO, ANDREA;ETRO, FEDERICO
2007

Abstract

We introduce Cournot competition and endogenous entry in an oth- erwise neoclassical macroeconomic framework. First, we develop a model with exogenous savings à la Solow describing the dynamic path of busi- ness creation. Then, we develop a model à la Ramsey describing the dynamic interaction of consumption and business creation. Our models are able to explain why markups vary countercylically and pro?ts are procyclical. The analysis of permanent and temporary technology and preference shocks and of the second moments suggests that our model can outperform the Real Business Cycle framework in many dimensions.
Working paper del dipartimento
Scientifica
Real Business; Cycles; Cournot Competition; Endogenous Entry
English
Colciago, A., Etro, F. (2007). Real Business Cycles with Cournot Competition and Endogenous Entry [Working paper del dipartimento].
Colciago, A; Etro, F
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10281/23159
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