Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
963175 | Journal of International Economics | 2011 | 15 Pages |
Abstract
⺠We examine the macroeconomic effects of firm level strategic decisions. ⺠The firm's pricing power, and thus its optimal markup increases in its market share. ⺠We incorporate endogenous markup variability in an IRBC model. ⺠This mitigates the price divergence following a country specific productivity shock. ⺠This leads to a significant increase in cross-county business cycle co-movement.
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Authors
J. Scott Davis, Kevin X.D. Huang,