Endogenous Market Structures and the Macroeconomy
This is a key year for the evolution of international markets. The global economy is experiencing the most severe downturn since the thirties, it is temporarily leaving a path of sustained growth that characterized the last decades, and is facing an impressive decline of trade between countries. Banks are going bankrupt, the stock market has crashed, rms are going out of bu- ness or drastically reducing their production and exports, workers are being red and investment in new business creation or innovation is shrinking. Meanwhile, consumers con dence has dropped at its minimum, aggregate demand has been declining for months and expansionary policies and int- national coordination have failed to counteract the crisis until now. It is quite likely that all this will change sooner or later, but at the end of this crisis our understanding of the macroeconomy may change as well. In front of these crucial events, this book is not an attempt at proposing a radically new way of interpreting macroeconomic phenomena, and, as a m- ter of fact, it is not even a book on macroeconomic theory. My more modest goal is to collect a number of insights derived from recent research on the role of competition and innovation in the analysis of three topics: business cycles, trade and growth through innovations.
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a¤ect aggregate analysis bene…ts Bertrand competition business creation business cycle capital Chapter characterized cloud computing competition in prices competition in quantities consumers consumption costs of entry countercyclical countries Cournot competition de…cit de…ned decreasing demand derive devaluation di¤erent di¤erentiated domestic rm dynamic e¤ect e˘cient elasticity empirical EMSs approach endogenous entry Endogenous Market Structures equation equilibrium Etro exchange rate exogenous export subsidies factor framework global growth rate impact implies in‡ation in‡ation rate incentives income increase incumbent ine˘cient innovation inputs interest rate international rms invest in R&D Krugman labor supply larger leader leads long run macroeconomic marginal cost mark market share maximize monetary policy neoclassical neoclassical approach nominal Notice number of rms output patent race perfect competition positive pro…tability pro…ts public spending reduce scal policy Schumpeterian growth Section sector shocks speci…c Stackelberg competition steady stock market strategic interactions technology shock theory trade policy variables xed costs zero