A Simple Business-Cycle Model with Schumpeterian Features

Luis Costa and Huw Dixon

No 105, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: We develop a dynamic general equilibrium model of imperfect competition where a sunk cost of creating a new product regulates the type of entry that dominates in the economy: new products or more competition in existing industries. Considering the process of product innovation is irreversible, introduces hysteresis in the business cycle. Expansionary shocks may lead the economy to a new ‘prosperity plateau,’ but contractionary shocks only affect the market power of mature industries

Keywords: Entry; Hysteresis; Mark-up (search for similar items in EconPapers)
JEL-codes: E62 L13 L16 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-com, nep-dge, nep-mac and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://repec.org/mmf2006/up.11754.1145633110.pdf (application/pdf)

Related works:
Working Paper: A Simple Business-Cycle Model with Shumpeterian Features (2007)
Working Paper: A Simple Business-cycle Model with Schumpeterian Features (2005)
Working Paper: A Simple Business-Cycle Model with Schumpeterian Features
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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:105

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