Firms' Entry, Monetary Policy and the International Business Cycle

Cavallari, Lilia

doi:10.2139/ssrn.2162425

Cited by 17 publications

(19 citation statements)

References 44 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Several papers, also provide empirical evidence that the number of producers varies over the business cycle and that …rms dynamics may play an important role in explaining business cycle dynamics and statistics. 7 Further, using an open economy framework, Melitz (2005 and study the role of …rms dynamics on international trade, whereas Bergin and Corsetti (2008) and Cavallari (2013) analyze the role of monetary policy and international coordination in a model with endogenous …rms'entry.…”

Section: Related Literaturementioning

confidence: 99%

The overshooting of firms’ destruction, banks and productivity shocks

Rossi

2019

European Economic Review

View full text Add to dashboard Cite

Using U.S. quarterly data we show that in response to a positive productivity shock: i) …rms'creation increases ii) …rms'destruction reduces at impact, it then overshoots its long run level, peaking three years later above its steady state. iii) banks' markup reduces. To address these three facts, we provide an NK-DSGE model where …rms dynamics is endogenous, the banking sector is monopolistic competitive and defaulting …rms do not repay loans to banks. We show that the interaction between …rms and banks is key to replicate the empirical evidence. Contrary to the conventional wisdom, in the baseline model the e¤ects of the shock are dampened with respect to a model without banks.

show abstract

Section: Related Literaturementioning

confidence: 99%

The overshooting of firms’ destruction, banks and productivity shocks

Rossi

2019

European Economic Review

View full text Add to dashboard Cite

show abstract

“…The model could be used to measure the social costs of business cycle ‡uctuations, which in the closed economy is entirely due to the ‡uctuations associated with markup variability. The natural extension of such a model concerns endogenous entry of …rms in the spirit of Bilbiie et al (2012) in the closed economy and Ghironi and Mélitz (2005) and Cavallari (2013b) in the open economy, which can a¤ect markups and aggregate variables. Moreover, one could consider imperfections in the labor and credit market to analyze complementarity with imperfect competition in driving business cycle propagation.…”

Section: Resultsmentioning

confidence: 99%

Demand, Markups and the Business Cycle. Bayesian Estimation and Quantitative Analysis in Closed and Open Economies

Cavallari¹,

Etro

2017

SSRN Journal

Self Cite

View full text Add to dashboard Cite

We generalize the demand side of a Real Business Cycle model introducing non-homothetic preferences over differentiated final goods. Under monopolistic competition this generates variable markups that depend on the level of consumption. We estimate a flexible preference specification through Bayesian methods and obtain countercyclical markups. The associated closed-economy model magnifies the propagation of shocks (compared to perfect competition or fixed markups) through additional substitution effects on labor supply and consumption. In an open-economy framework, it also generates positive comovements of output, labor and investment and reduces consumption correlation between countries: in particular, a positive shock in the Home country reduces its markups and improves its terms of trade, which promotes consumption in the Home country but also production in the Foreign country to exploit the increased profitability of exports.

show abstract

“…Recent developments at the intersection between trade and macroeconomics have pointed out that firms' selection into export markets is key to understand the way shocks are transmitted in the world economy: models with entry and exit of exporters (the extensive margin) predict larger and more persistent output effects compared to models in which shocks are transmitted only by fluctuations in the average amount of export per firm (the intensive margin). 1 Moreover, trade at the extensive margin helps to reconcile the predictions of standard international real business cycle models with the comovements of macroeconomic aggregates observed in the data (Cavallari 2013). These studies argue that variations at the extensive and intensive margins can have different implications for aggregate variables and suggest decomposing trade into these margins in the formulation of empirical and theoretical open economy models.…”

Section: Introductionmentioning

confidence: 93%

Export margins and world shocks: an empirical investigation in fixed and floating regimes

Cavallari

d’Addona

2019

Applied Economics

Self Cite

View full text Add to dashboard Cite

We use 4-digit data to document the role of world shocks for intensive and extensive margin of exports. We estimate a VAR model, where the endogenous bloc comprises bilateral export margins and relative GDP, and the exogenous bloc comprises disaggregated measures of world price shocks. We find that world shocks have a significant impact on both the average export volume and export diversification. Impulse responses display considerable heterogeneity depending on the shock considered, the exchange rate regime and the great trade collapse. The evidence in the paper has remarkable consequences for trade and exchange rate policies.

show abstract

Firms' Entry, Monetary Policy and the International Business Cycle

Cited by 17 publications

References 44 publications

The overshooting of firms’ destruction, banks and productivity shocks

The overshooting of firms’ destruction, banks and productivity shocks

Demand, Markups and the Business Cycle. Bayesian Estimation and Quantitative Analysis in Closed and Open Economies

Export margins and world shocks: an empirical investigation in fixed and floating regimes

Contact Info

Product

Resources

About