The Cyclical Behaviour of Wages and Profits under Imperfect Competition

Steven Ambler () and Emanuela Cardia ()

No 18, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: We build a simple dynamic model of the business cycle with monopolistically competitive firms. With simple assumptions concerning firm entry and exit, the model can explain some important stylised facts of the business cycle which standard real business cycle models with perfect competition cannot predict. These include the cyclical behaviour of the shares of capital and labour income in total income, the volatilities of these shares, and the pattern of net firm creation. These predictions are robust to whether the principle source of the business cycle is aggregate supply shocks or aggregate demand shocks.

Nous présentons un modèle dynamique simple du cycle d'affaires avec concurrence monopolistique entre les firmes. Sous des hypothèses simples concernant l'entrée et la sortie des firmes, le modèle peut expliquer certains faits caractéristiques du cycle économique, que les modèles standard du cycle avec concurrence parfaite ne peuvent pas prédire. Ces faits caractéristiques comprennent les fluctuations des parts des revenus du travail et du capital dans le revenu total, les variabilités de ces parts, et le comportement dynamique de la création nette de firmes. Ces prédicitions sont robustes face à des chocs technologiques affectant l'offre ou des chocs de demande.

Keywords: business cycles; imperfect competition; dynamic models (search for similar items in EconPapers)
JEL-codes: E32 E62 (search for similar items in EconPapers)
Date: 1993-08, Revised 1996-06
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Related works:
Journal Article: The Cyclical Behaviour of Wages and Profits under Imperfect Competition (1998)
Working Paper: The Cyclical Behaviour of Wages and Profits Under Imperfect Competition (1993)
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