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Product scope and endogenous fluctuations
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Pavlov, O
ORCID: 0000-0002-3961-1242 and Weder, M 2017
, 'Product scope and endogenous fluctuations'
, Review of Economic Dynamics, vol. 24
, pp. 175-191
, doi: 10.1016/j.red.2017.01.006.

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Official URL: http://dx.doi.org/10.1016/j.red.2017.01.006
Abstract
Recent empirical evidence suggests that product creation is procyclical and it occurs largely within existing firms. Motivated by these findings, the current paper investigates the role of intra-firm product scope choice in a general equilibrium economy with oligopolistic producers. It shows that the multi-product nature of firms makes the economy susceptible to sunspot equilibria. The model is estimated via Bayesian methods. Artificial business cycles closely resemble empirically observed fluctuations with sunspots explaining a significant portion of U.S. business cycles.
Item Type: | Article |
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Authors/Creators: | Pavlov, O and Weder, M |
Keywords: | indeterminacy, sunspot equilibria, multi-product firms, business cycles, bayesian estimation |
Journal or Publication Title: | Review of Economic Dynamics |
Publisher: | Academic Press Inc Elsevier Science |
ISSN: | 1094-2025 |
DOI / ID Number: | 10.1016/j.red.2017.01.006 |
Copyright Information: | © 2017 Elsevier Inc |
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