Reference : On business cycles of variety and quality
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Business & economic sciences : Microeconomics
On business cycles of variety and quality
Hamano, Masashige mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
[en] entry and exit ; fi rm heterogeneity ; the Schumpeterian destruction ; product quality ; business cycles
[en] This paper explores the role played by product variety and quality in a real business
cycle model. Firms are heterogeneous in terms of their speci c quality as well as pro-
ductivity levels. Firms which have costly technology enter in a period of high aggregated
demand and produce high quality goods. Thus, the average quality level and number of
available varieties are procyclical, as in the data. The model can replicate the observed
in flationary bias in the conventional Consumer Price Index due to a rise in the number
of new product varieties and quality.
Researchers ; Professionals ; Students

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