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Authors
Advisor(s)
Abstract(s)
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.
Description
Keywords
Entry Hysteresis Mark-Up
Pedagogical Context
Citation
Costa, Luis F. and Huw David Dixon .(2007). “A simple business-cycle model with Shumpeterian features”, Cardiff Business School | Cardiff Economics Working Papers, No. E 2007/28. Available at WWW. ECONSTOR EU . (Search PDF in 2024)
Publisher
Cardiff Business School | ECONSTOR EU