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Competition, Innovation, and the Business Cycle

69 Pages Posted: 7 Mar 2017  

Christophe Cahn

Banque de France - Direction des Entreprises

Date Written: January 31, 2012

Abstract

This paper reports quantitative implications of a stochastic endogenous growth model in which growth displays a concave relationship with respect to competition. This model is consistent with unavoidable facts related to market structure, that other innovation-based endogenous growth models fail to replicate. This model shows promising empirical properties in both the short- and long-term. The current paper argues that this model might be better suited to measuring welfare implications of phenomena involving growth effects. An illustrative exercise reports and compares measurement of the welfare cost of imperfect competition and fluctuations.

Keywords: Innovation, Competition, Endogenous Growth, Real Business Cycles

JEL Classification: D60, E32, 040

Suggested Citation

Cahn, Christophe, Competition, Innovation, and the Business Cycle (January 31, 2012). Available at SSRN: https://ssrn.com/abstract=2927709 or http://dx.doi.org/10.2139/ssrn.2927709

Christophe Cahn (Contact Author)

Banque de France - Direction des Entreprises ( email )

39 rue Croix des Petits Champs
Paris Cedex 01 75049
France

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