How do changes in market structure affect the US business cycle? We estimate a monetary DSGE model with endogenous firm/product entry and a translog expenditure function by Bayesian methods. The dynamics of net business formation allow us to identify the 'competition effect', by which desired...

This paper characterises optimal monetary policy in an economy with endogenous firm entry, a cash-in-advance constraint and preset wages. Firms must make profits to cover entry costs; thus the markup on goods prices is efficient. However, because leisure is not priced at a markup, the...

This paper characterises optimal monetary policy in an economy with endogenous …firm entry, a cash-in-advance constraint and preset wages. Firms must make pro…fits to cover entry costs; thus the markup on goods prices is efficient. However, because leisure is not priced at a markup, the...

How do changes in market structure affect the US business cycle? We estimate a monetary DSGE model with endogenous …rm/product entry and a translog expenditure function by Bayesian methods. The dynamics of net business formation allow us to identify the 'competition effect', by which desired...