On business cycles of variety and quality

Masashige Hamano

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: This paper explores the role played by product variety and quality in a real business cycle model. Firms are heterogeneous in terms of their specific quality as well as pro- ductivity levels. Firms which have costly technology enter in a period of high aggregated demand and produce high quality goods. Thus, the average quality level and number of available varieties are procyclical, as in the data. The model can replicate the observed inflationary bias in the conventional Consumer Price Index due to a rise in the number of new product varieties and quality.

Keywords: Entry and exit; firm heterogeneity; the Schumpeterian destruction; product quality; business cycles (search for similar items in EconPapers)
JEL-codes: D21 E23 E32 L11 L60 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://hdl.handle.net/10993/15269 (application/pdf)

Related works:
Working Paper: On Quality and Variety Bias in Aggregate Prices (2017)
Working Paper: On business cycles of product variety and quality (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:13-21

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