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Analytical solutions to an RBC model with imperfect competition, increasing returns and underemployment

Published online by Cambridge University Press:  17 August 2016

Jean-Pascal Bénassy
Jean-Pascal Bénassy*
Affiliation:
CEPREMAP and CNRS
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Summary

We construct in this paper a “benchmark” model of fluctuations withoptimizing households and firms. The economy is a monetary one, withimperfect competition in goods and labor markets, as well as increasingreturns to scale and specialization. This economy is subject totechnological and monetary shocks. Analytical solutions are derived, whichallow to understand the respective roles of imperfect competition andincreasing returns in generating underemployment of resources and potentialpersistence effects.

Résumé

Résumé

On construit dans cet article un modèle de référence de type “RBC’ avec monnaie, concurrence imparfaite sur les marchés des biens et du travail, rendements d’échelle et de spécialisation croissants. L’économie est soumise à des chocs technologiques et monétaires. On obtient des solutions dynamiques exactes, ce qui permet de bien comprendre les rôles respectifs de la concurrence imparfaite et des rendements croissants dans la genèse du sous-emploi et des effets de persistance qui apparaissent dans le modèle.

Keywords

E32D43E32D43
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 62 , Issue 3-4 , 1996 , pp. 287 - 297
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1996 

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Footnotes

(*)

I am indebted to David de la Croix and an anonymous referee for their valuable suggestions on a first version of this article. I remain of course responsible for any remaining deficiencies.

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