Market entry and international propagation of business cycles

• 成果类型: Article
• 署名作者: Cook, D
• 署名单位: Hong Kong University of Science & Technology
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(01)00112-X
• 发表日期: 2002
• 页码: 155-175
• 关键词: counter-cyclical markups; International comovement

摘要

In this paper, pro-cyclical market entry acts as an international transmission mechanism for business cycle shocks. In an imperfectly competitive dynamic equilibrium model, an expansion in one open economy leads to additional business formation in a parallel large open economy through demand spillovers. Business formation causes a decline in markups leading to an expansion in employment, production, and investment in both economies. The modeling of the entry decision is critical. Only when the entry game is modelled as sequential (with incumbents enjoying a first mover advantage) are markups sufficiently elastic to cause international comovement. (C) 2002 Elsevier Science B.V. All rights reserved.