We introduce firm heterogeneity into the standard monopolistically competitive real business cycle (RBC) model. The fundamental equilibrium path is derived and the time-series properties of aggregate GDP are studied analytically. Although firms' productivities are subject to temporary shocks, the aggregate process displays a surprising novel form of nonlinearity and long memory which had not been built into the model at the outset. This aggregate GDP turns out to have very different properties from log-linear time-series models such as auto-regressive (AR) models and their extensions. It displays very strong persistence, which ends abruptly with a sudden change of tendency, giving its autocorrelation function (ACF) an S-shape. Although persistent, it is mean-reverting, unlike the everlasting memory of unit-root processes. Its volatility is of a greater order of magnitude than that of any of its components, so small micro-shocks can generate large macro fluctuations. It is also characterized by long, asymmetric cycles of random lengths. Increased monopoly power tends to reduce the amplitude and increase the persistence of business cycles. Strikingly, we find that the empirical ACFs constructed from GDP data for the U.K. and the U.S. display this characteristic S-shape.

The aim of this study was to evaluate the postoperative consequences of chorda tympani reclining during middle ear surgery for otosclerosis. Electrogustometric taste thresholds were measured at 11 loci on the tongue and the soft palate in 14 patients before surgery, and 8 d, 1 month and (in some cases) 6 months after surgery. A significant increase in thresholds was observed on the ipsilateral side of the tongue after surgery. The extent of the deficit and the recovery time course depended on tongue locus. The tip of the tongue displayed a limited deficit, suggesting bilateral chorda tympani innervation. The edge of the tongue was less impaired than the dorsal or the lateral tip loci; it may be dually innervated by both chorda tympani and glossopharyngeal nerves in humans, as already shown in rats. Likewise for the fungiform papillae located just anterior to the circumvallate papillae. Somatosensory early complaints suggest a derepression of chorda tympani on lingual nerve signals. In a second stage, relief of complaints before electrogustometric threshold recovery suggested trigeminal compensation of the chorda tympani deficit. Relief of complaints seems to involve central integrative processes, whereas the evolution of electrogustometric threshold represents the actual recovery time course of chorda tympani peripheral sensitivity.

This paper analyzes the relationship between income distribution and economic growth. It introduces heterogeneous households who have preferences for leisure into Grossman and Helpman's model of endogenous growth (in which income distribution has no effect on economic growth). Wealth distribution affects the endogenous rate of growth as the labor supply of each individual responds inversely to his permanent income. When the labor Engel curve is concave (convex), unequal wealth distribution decreases (increases) the rate of growth. Pareto-improving-growth-enhancing wealth mdislributions are characterized.

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Copyright belongs to the author. Small sections of the text, not exceeding three paragraphs, can be used provided proper acknowledgement is given. The Rimini Centre for Economic Analysis (RCEA) was established in March 2007. RCEA is a private, non-profit organization dedicated to independent research in Applied and Theoretical Economics and related fields. RCEA organizes seminars and workshops, sponsors a general interest journal The Review of Economic Analysis, and organizes a biennial conference: Small Open Economies in the Globalized World (SOEGW). Scientific work contributed by the RCEA Scholars is published in the RCEA Working Papers series. The views expressed in this paper are those of the authors. No responsibility for them should be attributed to the Rimini Centre for Economic Analysis.