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Title:Indeterminacy, business cycles, and modest increasing returns to scale PDF Logo
Authors:Weder, Mark
Issue Date:1997
Series/Report no.:Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 1997,60
Abstract:In this paper a dynamic model of monopolistic competition with entry and exit has been presented and examined. It is shown that the model displays indeterminacy at modest degrees of increasing returns in cases where the market power in the consumption goods market and in the investment goods market differs. Furthermore, the model is quite successful in replicating major U.S. business cycle facts. In contrast to existing Real Business Cycle models, the animal spirits model contains a strong endogenous propagation mechanism.
Subjects:Sunspots
technology shocks
economic fluctuations
Persistent Identifier of the first edition:urn:nbn:de:kobv:11-10064474
Document Type:Working Paper
Appears in Collections:Discussion Papers, SFB 373, HU Berlin

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