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Article: Monopolistic competition, increasing returns to scale, and the welfare costs of inflation
Title | Monopolistic competition, increasing returns to scale, and the welfare costs of inflation |
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Authors | |
Keywords | Dynamic Indeterminacy E31 E32 E37 Monopolistic Competition Welfare Costs Of Inflation |
Issue Date | 2000 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jme |
Citation | Journal Of Monetary Economics, 2000, v. 46 n. 2, p. 417-440 How to Cite? |
Abstract | This paper introduces monopolistic competition and increasing returns to scale into a monetary real business cycle (RBC) model to re-estimate the welfare costs of inflation. We first calibrate the model and show that it is capable of generating the observed aggregate fluctuations even when there are no shocks to the fundamentals. In particular, we demonstrate that this model matches the stylized U.S. business cycles facts as well as two more standard models. Then, we find that in this model the scale parameters and the intensity of competition significantly affects the welfare cost of inflation. Specifically, the cost is considerably higher than that in a standard RBC model with competitive markets and constant returns. Moreover, the stronger the increasing returns and the less intense the competition, the higher the welfare costs. These results are confirmed in a number of model specifications. © 2000 Elsevier Science B.V. |
Persistent Identifier | http://hdl.handle.net/10722/177712 |
ISSN | 2023 Impact Factor: 4.3 2023 SCImago Journal Rankings: 6.564 |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
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dc.contributor.author | Wu, Y | en_US |
dc.contributor.author | Zhang, J | en_US |
dc.date.accessioned | 2012-12-19T09:39:39Z | - |
dc.date.available | 2012-12-19T09:39:39Z | - |
dc.date.issued | 2000 | en_US |
dc.identifier.citation | Journal Of Monetary Economics, 2000, v. 46 n. 2, p. 417-440 | en_US |
dc.identifier.issn | 0304-3932 | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/177712 | - |
dc.description.abstract | This paper introduces monopolistic competition and increasing returns to scale into a monetary real business cycle (RBC) model to re-estimate the welfare costs of inflation. We first calibrate the model and show that it is capable of generating the observed aggregate fluctuations even when there are no shocks to the fundamentals. In particular, we demonstrate that this model matches the stylized U.S. business cycles facts as well as two more standard models. Then, we find that in this model the scale parameters and the intensity of competition significantly affects the welfare cost of inflation. Specifically, the cost is considerably higher than that in a standard RBC model with competitive markets and constant returns. Moreover, the stronger the increasing returns and the less intense the competition, the higher the welfare costs. These results are confirmed in a number of model specifications. © 2000 Elsevier Science B.V. | en_US |
dc.language | eng | en_US |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jme | en_US |
dc.relation.ispartof | Journal of Monetary Economics | en_US |
dc.subject | Dynamic Indeterminacy | en_US |
dc.subject | E31 | en_US |
dc.subject | E32 | en_US |
dc.subject | E37 | en_US |
dc.subject | Monopolistic Competition | en_US |
dc.subject | Welfare Costs Of Inflation | en_US |
dc.title | Monopolistic competition, increasing returns to scale, and the welfare costs of inflation | en_US |
dc.type | Article | en_US |
dc.identifier.email | Zhang, J: jjzhang@econ.hku.hk | en_US |
dc.identifier.authority | Zhang, J=rp01124 | en_US |
dc.description.nature | link_to_subscribed_fulltext | en_US |
dc.identifier.scopus | eid_2-s2.0-0042415699 | en_US |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-0042415699&selection=ref&src=s&origin=recordpage | en_US |
dc.identifier.volume | 46 | en_US |
dc.identifier.issue | 2 | en_US |
dc.identifier.spage | 417 | en_US |
dc.identifier.epage | 440 | en_US |
dc.identifier.isi | WOS:000089225600006 | - |
dc.publisher.place | Netherlands | en_US |
dc.identifier.scopusauthorid | Wu, Y=7406895405 | en_US |
dc.identifier.scopusauthorid | Zhang, J=55367373100 | en_US |
dc.identifier.issnl | 0304-3932 | - |