The aim of this paper, which is part of a broader research project, is to analyse the fluctuations of output in a framework of imperfect competition based on the stylised facts. We conclude that these movements can be originated by supply or demand shocks, or simply by the adjustment of the...

We build a simple dynamic model of the business cycle with monopolistically competitive firms. With simple assumptions concerning firm entry and exit, the model can explain some important stylized facts of the business cycle which standard real business cycle models with perfect competition...