Browsing by Author "Dixon, Huw D."
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- A simple business-cycle model with schumpeterian featuresPublication . Costa, Luís F.; Dixon, Huw D.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.