Technological Foundations for Dynamic Models with Endogenous Entry

Federico Etro ()

European Economic Review, 2020, vol. 128, issue C

Abstract: I explore the technological foundations of dynamic entry models à la Bilbiie-Ghironi-Melitz where the endogenous creation of new inputs can generate either neoclassical business cycle dynamics or long run growth. Under a general CRS technology in labor and intermediate goods produced by monopolistic innovators, substitutability between inputs drives markups and profitability of innovations as functions of the number of firms. Decreasing profitability tends to generate a stable steady state associated with a propagation of shocks fostered by endogenous productivity. The decentralized equilibrium is inefficient and I characterize the optimal policy to fix static and dynamic inefficiencies.

Keywords: Entry; monopolistic competition; variable markups; technology; growth; business cycle (search for similar items in EconPapers)
JEL-codes: E1 E2 E3 F4 L1 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0014292120301483
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Technological Foundations for Dynamic Models with Endogenous Entry (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:128:y:2020:i:c:s0014292120301483

DOI: 10.1016/j.euroecorev.2020.103517

Access Statistics for this article

European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().