A Note on Markups and Entry

15 Pages Posted: 2 Dec 2012 Last revised: 3 Dec 2012

See all articles by Lilia Cavallari

Lilia Cavallari

Sapienza University of Rome - Department of Public Economics; University of Rome III - DIPES

Date Written: November 29, 2012

Abstract

This note studies the synchronization of firm entry and markups in a DSGE model with nominal frictions. Simulations show that the model matches the comovement of markups and entry observed in the data while at the same time reproducing empirically plausible moments for macroeconomic variables. I stress that sticky prices are essential for these results.

Keywords: Firm entry, firm dynamics, monopolistic competition, market power, markup

JEL Classification: E31, E32, E52

Suggested Citation

Cavallari, Lilia and Cavallari, Lilia, A Note on Markups and Entry (November 29, 2012). Available at SSRN: https://ssrn.com/abstract=2182668 or http://dx.doi.org/10.2139/ssrn.2182668

Lilia Cavallari (Contact Author)

University of Rome III - DIPES ( email )

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Sapienza University of Rome - Department of Public Economics ( email )

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Italy
+39 0649766329 (Phone)
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