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Self-Fulfilling Prophecies, Demand-Composition Effects and Economic Fluctuations

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  3. Journal of Contextual Economics – Schmollers Jahrbuch
  4. Vol. 119, Issue 4
  5. pp. 509–529

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Weder, M. Self-Fulfilling Prophecies, Demand-Composition Effects and Economic Fluctuations. Journal of Contextual Economics – Schmollers Jahrbuch, 119(4), 509-529. https://doi.org/10.3790/schm.119.4.509
Weder, Mark "Self-Fulfilling Prophecies, Demand-Composition Effects and Economic Fluctuations" Journal of Contextual Economics – Schmollers Jahrbuch 119.4, 1999, 509-529. https://doi.org/10.3790/schm.119.4.509
Weder, Mark (1999): Self-Fulfilling Prophecies, Demand-Composition Effects and Economic Fluctuations, in: Journal of Contextual Economics – Schmollers Jahrbuch, vol. 119, iss. 4, 509-529, [online] https://doi.org/10.3790/schm.119.4.509
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Self-Fulfilling Prophecies, Demand-Composition Effects and Economic Fluctuations

Weder, Mark

Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 119 (1999), Iss. 4 : pp. 509–529

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Article Details

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Duncker & Humblot
DOI
https://doi.org/10.3790/schm.119.4.509
Language
Multiple languages
Pages
21

Weder, Mark

References

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Abstract

This paper develops a dynamic general equilibrium model of monopolistic competition with entry and exit. It is shown that the model displays indeterminacy at modest degrees of increasing returns in cases when the market power in the consumption goods market and in the investment goods market is asymmetric. Furthermore, the model is successful in replicating major business cycle facts. In contrast to most existing Real Business Cycle models, the animal spirits model contains a strong endogenous propagation mechanism.

Table of Contents

Section Title Page Action Price
Mark Weder: Self-Fulfilling Prophecies,\rDemand-Composition Effects and\rEconomic Fluctuations 509
1. Introduction 509
2. The model 511
2.1 The household 511
2.2 The firms 513
3. The equilibrium dynamics 516
3.1 The steady state 516
3.2 The solution mechanism and indeterminacy 517
3.3 Calibration 517
3.4 Indeterminacy results 518
3.4.1 Eigenvalues 518
3.5 Interpretation 521
4. Second moments 523
4.1 Population moments 523
4.2 Model moments: theory 524
4.3 Model moments 524
5. Conclusion 526
Appendix 527
References 528
Abstract 529
Zusammenfassung 529

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