entry and exit; firm heterogeneity; the Schumpeterian destruction; business cycles
Abstract :
[en] This paper revisits Schumpeterian destruction in a DSGE model based on monopolistic
competition. Firms enter the market through a free entry condition and exit endogenously
depending on their specific productivity level. The mechanism of endogenous destruction
among heterogeneous firms is based on the probabilistic argument discussed in Melitz
(2003). The models in the paper are successful in reproducing observed business cycle
patterns for creation and destruction and other major economic variables. The models
also feature typical characteristics of Schumpeterian economies as found in literature.
Disciplines :
Microeconomics
Author, co-author :
HAMANO, Masashige ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
Language :
English
Title :
Endogenous Firm creation and destruction over the business cycle
