A Note on Markups and Entry
15 Pages Posted: 2 Dec 2012 Last revised: 3 Dec 2012
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: Suggested Citation
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