Declining Output Volatility in Germany: Impulses, Propagation, and the Role of Monetary Policy
Ulrich Fritsche () and
No 433, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
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
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Journal Article: Declining output volatility in Germany: impulses, propagation, and the role of monetary policy (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp433
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