A recent theoretical literature highlights the role of endogenous firm entry as an internal amplification mechanism of … variety effect. To this end, we estimate a medium-scale real business cycle model with firm entry for the U.S. economy. The …

A recent theoretical literature highlights the role of endogenous firm entry as an internal amplification mechanism of … variety effect. To this end, we estimate a medium-scale real business cycle model with firm entry for the U.S. economy. The … parameter governing the competition and variety effect is estimated to be statistically significant. We find that firm entry …

/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 price markups and inflation decrease when entry rises. We find that a 1 percent …