Firms Endogenous Entry and Monopolistic Banking in a DSGE model

Carla La Croce () and Lorenza Rossi

No 104, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: We consider a DSGE model with monopolistic competitive banks together with endogenous firms entry. We find that our model implies higher volatilities of both real and financial variables than those implied by a DSGE model with monopolistic banking sector and a ?fixed number of firms. The response of the economic activity is also more persistent in response to all shocks. Furthermore, we show that inefficient banks enhance the endogenous propagation of the shocks in respect to a model where banks compete under perfect competition and can fully ensure against the risk of firms default.

Pages: 21 pages
Date: 2015-06
New Economics Papers: this item is included in nep-com and nep-dge
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: FIRMS' ENDOGENOUS ENTRY AND MONOPOLISTIC BANKING IN A DSGE MODEL (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pav:demwpp:demwp0104

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