Fiscal policy,entry and capital accumulation: Hump-shaped responses |
| |
Authors: | Paulo Brito Huw Dixon |
| |
Institution: | 1. Technical University of Lisbon, ISEG and UECE, Rua Miguel Lupi, 20, 1249-078 Lisboa, Portugal;2. Cardiff Business School, Aberconwy Building, Column Drive, Cardiff CF12 3EU, UK |
| |
Abstract: | In this paper we consider the entry and exit of firms in a Ramsey model with capital and an endogenous labour supply. At the firm level, there is a fixed cost combined with increasing marginal cost, which gives a standard U-shaped cost curve with optimal firm size. The costs of entry (exit) are quadratic in the flow of new firms. The number of firms becomes a second state variable and the entry dynamics gives rise to a richer set of dynamics than in the standard case: in particular, there is likely to be a hump shaped response of output to a fiscal shock with maximum effect after impact and before steady-state is reached. Output and capital per firm are also likely to be hump shaped. |
| |
Keywords: | E22 D92 E32 D92 |
本文献已被 ScienceDirect 等数据库收录! |
|