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In order to study the propagation mechanism of business cycles, in particular to investigate how the intensity of competition affects market structure and output persistence over business cycles, this paper presents a real business-cycle model with imperfect competition and increasing returns to scale. This analysis considers the markups of price over cost to be endogenous. With endogenous markups, two standard forms of oligopolistic competition-Bertrand and Cournot--are considered. Results show that: (1) the propagation mechanism in the sense of output persistence is greater under Cournot; (2) the propagation mechanism is unequivocally greater with imperfect competition, regardless of whether markups are endogenous or not; and (3) under imperfect competition, the propagation mechanism is greater with endogenous markups than with exogenous markups. Overall, these results suggest that more intense competition produces lower persistence in output growth and, thus, a weaker propagation mechanism. In a calibration exercise, these differences were also found to be quantitatively important. JEL Classification: E32, D43, 1. Introduction It is well known that standard real business-cycle (RBC) models in connection with perfect competition and constant returns to scale, while capable of capturing a number of stylized [...]

Byline: Andy C. C. Kwan (1), Yangru Wu (2,2), Junxi Zhang (3) Abstract: This paper attempts to investigate empirically the investment-growth relationship in China. Using the exogeneity framework pioneered by Engle et al. (1983) and Engle and Hendry (1993), we find that fixed investment is a key determinant of China's economic growth, which, surprisingly, has not been rigorously examined in the literature. The super exogeneity test results suggest that there exists a robust (or structurally invariant) relationship between capital formation and income growth, thereby giving credence to policy evaluation. Author Affiliation: (1) Chinese University of Hong Kong, Hong Kong, China (2) Rutgers University, Newark, NJ, 07102-1820, USA (3) University of Hong Kong, Hong Kong, China Article History: Registration Date: 03/10/2004

1. Introduction In recent years, there has been growing interest in studying the effects of unanticipated monetary shocks. It is well understood that such effects are mingled by two opposing [...]

A monetary endogenous growth model revealed the significant long-term effects of inflation on economic growth. The model showed that the welfare costs of moderate inflation are large, which ranges from one-half percent to five percent for a yearly 10% monetary growth. The importance of monetary policy on economic growth was also emphasized by the endogenous growth model.

A monetary endogenous growth model is developed to assess the impact of anticipated inflation on per capita real variables and economic welfare. The model considers endogenous labor-leisure trade-off, specifies the functional forms of leisure disutility and provides comparative static results of responses to anticipated inflation. It is shown that contrary to existing studies, increased welfare costs result from reduced output growth.

I. Introduction Generally speaking, developed and developing countries face two distinct population problems. While developed countries are concerned with below-replacement fertility and have used some implicit pro-natalist policies to increase [...]

JUNXI ZHANG [*] This article conducts a systematic analysis of four bequest motives in a simple model of endogenous growth. It analyzes how bequest motives affect fertility savings, growth, and [...]

Statistical information from 14 member countries of the Organisation for Economic Cooperation and Development has been used to create a model showing how income tax effects consumption in countries where monopolistic competition is permitted.

Production functions do not always show returns to scale that are constant, as is shown in a model where public services act as a production input and utility source. Factors affecting equilibrium are also examined.

In this paper the effects of social security in a simple model of endogenous growth with alternative motives of having children are analysed. It shows how the effects of social security depend on the size of the social security tax, the motive to have children, and the pattern of intergenerational transfers. The pattern of intergenerational transfers itself, however, is shown to change with the social security tax rate. When the social security tax is not too high, social security increases per capita income growth and tends to enhance welfare.