The Cyclical Behavior of Wages and Profits Under Imperfect Competition

Posted: 23 Sep 1996

See all articles by Steve Ambler

Steve Ambler

University of Quebec at Montreal (UQAM) - Centre de recherche sur l'emploi et les fluctuations économiques (CREFÉ)

Emanuela Cardia

University of Montreal - Center for Research and Development in Economics

Date Written: June 1996

Abstract

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 cannot predict. These include the cyclical behavior of the shares of capital and labor income in total income, the volatilities of these shares, and the pattern of net firm creation. These predictions are robust to whether the principle source of the business cycle is aggregate supply shocks or aggregate demand shocks.

JEL Classification: E32, E62

Suggested Citation

Ambler, Steve and Cardia, Emanuela, The Cyclical Behavior of Wages and Profits Under Imperfect Competition (June 1996). Available at SSRN: https://ssrn.com/abstract=3335

Steve Ambler (Contact Author)

University of Quebec at Montreal (UQAM) - Centre de recherche sur l'emploi et les fluctuations économiques (CREFÉ) ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada
514-987-3000 ext. 8372 (Phone)
514-987-8494 (Fax)

Emanuela Cardia

University of Montreal - Center for Research and Development in Economics ( email )

Montreal, Quebec H3T 1B9
Canada

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