Increasing Returns, Durables and Economic Fluctuations
We describe an economy where a durable good is produced with an increasing returns to scale technology. Equilibria in this economy take the form of business cycles in which consumption fluctuates too much and is too low on average. A 2-sector version of this economy with imperfect credit and immobile labor also exhibits aggregate business cycles, in which outputs and labor inputs in different sectors move together. The model is consistent with a broad range of evidence on economic fluctuations.
Year of publication: |
1989-06
|
---|---|
Authors: | Murphy, Kevin M. ; Shleifer, Andrei ; Vishny, Robert W. |
Institutions: | National Bureau of Economic Research (NBER) |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Industrialization and the Big Push
Murphy, Kevin M., (1988)
-
Building Blocks of Market Clearing Business Cycle Models
Murphy, Kevin M., (1989)
-
The Allocation of Talent: Implications for Growth
Murphy, Kevin M., (1990)
- More ...