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Declining Output Volatility in Germany: Impulses, Propagation, and the Role of Monetary Policy

Ulrich Fritsche () and Vladimir Kuzin

No 433, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper investigates the effect of economic integration on the ability of firms to maintain a collusive understanding about staying out of each other's markets. The paper distinguishes among different types of trade costs: ad valorem, unit, fixed. It is shown that for a sufficient reduction of ad valorem trade costs, a cartel supported by collusion on either quantities or prices will be weakened, thus integration is pro-competitive. If integration consists of a reductions in unit (fixed) trade costs a price setting cartel is strengthened (unaffected), while a quantity setting one is weakened.

Keywords: Output; Volatility; Monetary policy; Markov switching model; State space model; Spectral analysis; DSGE model (search for similar items in EconPapers)
JEL-codes: F15 L13 L12 F12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge
Date: 2004
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Journal Article: Declining output volatility in Germany: impulses, propagation, and the role of monetary policy (2005) Downloads
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