Aggregate fluctuations with increasing returns to specialization and scale

Devereux, Michael B.; Head, Allen; Lapham, Beverly

doi:10.1016/0165-1889(95)00868-3

Cited by 96 publications

(83 citation statements)

References 11 publications

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“…Campbell (1998) finds that the quarterly entry rate exhibits procyclical behavior, whereas the quarterly exit rate is countercyclical and is positively correlated with future GDP growth. Cooper and Chatterjee (1993) and Devereux, Head, and Lapham (1996) find that net business formation shows a strong procyclical movement. Figure 1 shows the annual entry and exit rates measured as the share of entering or exiting plants in the manufacturing industry within a given year.…”

Section: Patterns Of Entry and Exit Over The Business Cyclementioning

confidence: 99%

The Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-level Data

Lee¹

2005

Working Paper (Federal Reserve Bank of Cleveland)

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Section: Patterns Of Entry and Exit Over The Business Cyclementioning

confidence: 99%

The Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-level Data

Lee¹

2005

Working Paper (Federal Reserve Bank of Cleveland)

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“…10 9 Our production function (1) is more general than the one used by Hornstein (1993) and Devereux, Head, and Lapham (1996b) in that the diversity effect (η) and the price elasticity of input demand (µ/(1 − µ)) are parameterized separately. Ethier (1982), Heijdra and Van der Ploeg (1996), Devereux, Head, and Lapham (1996a), Bénassy (1996a-b), and Dixit and Stiglitz ([1975], 2004) also explicitly distinguish the two conceptually different effects. 10 Note that these external scale economies only become effective if the number of firms is allowed to change.…”

Section: Final Goods Sectormentioning

confidence: 99%

Fiscal policy, monopolistic competition, and finite lives

Heijdra

Ligthart

2007

Journal of Economic Dynamics and Control

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The paper studies the short-run, transitional, and long-run output effects of permanent and temporary shocks in public consumption under various financing methods. To this end, a dynamic macroeconomic model for a closed economy is developed, which features a perfectly competitive final goods sector and a monopolistically competitive intermediate goods sector. Finitely lived households consume final goods, supply labor, and save part of their income. Amongst the findings for a permanent rise in public consumption are: (i) monopolistic competition increases the absolute value of the balanced-budget output multiplier; (ii) positive long-run output multipliers are obtained only if the generational turnover effect is dominated by the intertemporal labor supply effect; (iii) short-run output multipliers under lump-sum tax financing are smaller than long-run output multipliers if labor supply is elastic; and (iv) bond financing reduces the size of long-run output multipliers as compared to lump-sum tax financing and may give rise to non-monotonic adjustment paths if labor supply is sufficiently elastic and the speed of adjustment of lump-sum taxes is not too high. Temporary bond-financed fiscal shocks are shown to yield: (i) permanent effects on output; and (ii) negative long-run output multipliers. JEL codes: E12, E63, L16.

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“…For the US, the cyclical properties of net entry have been documented by Chatterjee and Cooper (1993), Devereux et al (1996) and Campbell (1997). Bilbiie et al (2005) show that net entry and pro…ts comove, and both are strongly procyclical.…”

Section: Introductionmentioning

confidence: 99%

Macroeconomic Fluctuations and Firm Entry: Theory and Evidence

Lewis

2006

SSRN Journal

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This paper studies the behaviour of firm entry and exit in response to macroeconomic shocks. We formulate a dynamic stochastic general equilibrium model with an endogenous number of producers. From the calibrated model, we derive a minimum set of robust sign restrictions to identify four kinds of macroeconomic shocks in a vector autoregression, namely supply, demand, monetary and entry cost shocks. The variables entering the VAR are output, inflation, the nominal interest rate, profits and firm entry. The response of firm entry to the various shocks is freely estimated. Our main finding is that entry responds significantly to all types of shocks. The results also show a crowding-in of firm entry following an exogenous rise in demand, consistent with the effect of a consumption preference shock predicted by the model. JEL classification: E30, E32.

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Aggregate fluctuations with increasing returns to specialization and scale

Cited by 96 publications

References 11 publications

The Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-level Data

The Importance of Reallocations in Cyclical Productivity and Returns to Scale: Evidence from Plant-level Data

Fiscal policy, monopolistic competition, and finite lives

Macroeconomic Fluctuations and Firm Entry: Theory and Evidence

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