An Incomplete Markets Model of Business Cycles

Steven Durlauf

Working papers from Wisconsin Madison - Social Systems

Abstract: This paper explores the effects of incomplete markets and positive spillovers on aggregate and industry output behavior. We consider an economy composed of a fixed set of infinitely-lived industries. When industries coordinate production decisions they jointly improve their productivity. Markets are missing, however, in the sense that industries cannot automatically form the most productive coalitions due to the presence of communication frictions.

Keywords: BUSINESS CYCLES; EXTERNALITIES; INDUSTRY; ENTERPRISES; PRODUCTIVITY (search for similar items in EconPapers)
JEL-codes: D60 D62 E30 E32 L10 (search for similar items in EconPapers)
Pages: pages
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:att:wimass:9615

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