Imperfectly Competitive Cycles with Keynesian and Walrasian Features

Kaas, Leo and Madden, Paul (September 2000) Imperfectly Competitive Cycles with Keynesian and Walrasian Features. Former Series > Working Paper Series > IHS Economics Series 83


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Abstract: We consider a multi-sector overlapping generations model with imperfectly competitive firms in the output markets and wage setting trade unions in the labour markets. A coordination problem between firms creates multiple temporary equilibria which are either Walrasian or of the Keynesian unemployment type. There exist many deterministic and stochastic equilibrium cycles fluctuating between Keynesian recession and Walrasian boom periods with arbitrarily long phases in each regime. The cycles are in accordance with certain empirical regularities. Money is neutral and superneutral, but appropriate countercyclical fiscal policies stabilize the cycles in a textbook Keynesian way.;

Item Type: IHS Series
Keywords: 'Endogenous business cycles' 'Imperfect competition' 'Stabilization policy'
Classification Codes (e.g. JEL): D43, E32, E62
Date Deposited: 26 Sep 2014 10:37
Last Modified: 26 Sep 2019 16:50
ISBN: 1605-7996

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