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A Simple Business-Cycle Model with Schumpeterian Features

Luis Costa () and Huw Dixon ()

No 105, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: We develop a dynamic general equilibrium model of imperfect competition where a sunk cost of creating a new product regulates the type of entry that dominates in the economy: new products or more competition in existing industries. Considering the process of product innovation is irreversible, introduces hysteresis in the business cycle. Expansionary shocks may lead the economy to a new ‘prosperity plateau,’ but contractionary shocks only affect the market power of mature industries

Keywords: Entry; Hysteresis; Mark-up (search for similar items in EconPapers)
JEL-codes: E62 L13 L16 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-com, nep-dge, nep-mac and nep-mic
References: View references in EconPapers View complete reference list from CitEc
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http://repec.org/mmf2006/up.11754.1145633110.pdf (application/pdf)

Related works:
Working Paper: A Simple Business-Cycle Model with Shumpeterian Features (2007) Downloads
Working Paper: A Simple Business-cycle Model with Schumpeterian Features (2005) Downloads
Working Paper: A Simple Business-Cycle Model with Schumpeterian Features Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:105

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