Free entry and business cycles under the influence of animal spirits

Rodolphe Dos Santos Ferreira and Frédéric Dufourt

Post-Print from HAL

Abstract: We provide a business cycle model in which endogenous markup fluctuations are the main driving force. These fluctuations occur due to some form of 'animal spirits', impelling firms in their entry-exit decisions within each sector. By contrast to existing models of the business cycle emphasizing the role of animal spirits, we do not rely on the sink property of the equilibrium to generate indeterminacy. Hence, while our model does pretty well in accounting for the main features of US business cycles, it avoids several criticisms addressed to these former models, concerning either their dependence upon strongly increasing returns and too high markups, or their implication of countercyclical movements of consumption.

Keywords: Imperfect competition; Business cycles; Animal spirits (search for similar items in EconPapers)
Date: 2006-03-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00789030v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Published in Journal of Monetary Economics, 2006, 53 (2), pp.311-328. ⟨10.1016/j.jmoneco.2004.12.003⟩

Downloads: (external link)
https://shs.hal.science/halshs-00789030v1/document (application/pdf)

Related works:
Journal Article: Free entry and business cycles under the influence of animal spirits (2006)
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:hal:journl:halshs-00789030

DOI: 10.1016/j.jmoneco.2004.12.003

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().