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New-Keynesian Phillips curve with Bertrand competition and endogenous entry

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New-Keynesian Phillips curve with Bertrand competition and endogenous entry. / Etro, F.; Rossi, L.
In: Journal of Economic Dynamics and Control, Vol. 51, 28.02.2015, p. 318-340.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Etro, F & Rossi, L 2015, 'New-Keynesian Phillips curve with Bertrand competition and endogenous entry', Journal of Economic Dynamics and Control, vol. 51, pp. 318-340. https://doi.org/10.1016/j.jedc.2014.10.009

APA

Etro, F., & Rossi, L. (2015). New-Keynesian Phillips curve with Bertrand competition and endogenous entry. Journal of Economic Dynamics and Control, 51, 318-340. https://doi.org/10.1016/j.jedc.2014.10.009

Vancouver

Etro F, Rossi L. New-Keynesian Phillips curve with Bertrand competition and endogenous entry. Journal of Economic Dynamics and Control. 2015 Feb 28;51:318-340. Epub 2014 Nov 12. doi: 10.1016/j.jedc.2014.10.009

Author

Etro, F. ; Rossi, L. / New-Keynesian Phillips curve with Bertrand competition and endogenous entry. In: Journal of Economic Dynamics and Control. 2015 ; Vol. 51. pp. 318-340.

Bibtex

@article{1735ba617f7f45da8904ef76e01dabd1,
title = "New-Keynesian Phillips curve with Bertrand competition and endogenous entry",
abstract = "We derive a New Keynesian Phillips curve under Calvo staggered pricing and endogenous market structures with Bertrand competition. Both strategic interactions and endogenous business creation strengthen the nominal rigidities. Price adjusters change their prices less when there are more direct competitors that do not adjust, which reduces the slope of the Phillips curve. Current and future firms entering in the markets decrease current inflation because they reduce markups and the welfare-based price index. Endogenous entry amplifies the impact of both monetary and supply shocks. We also characterize the optimal social planner allocation, that can be replicated with a labor subsidy and a dividend tax (both decreasing in the number of firms) and zero producer price inflation. The optimal Ramsey allocation implies zero inflation tax in steady state. ",
keywords = "Bertrand competition, Endogenous entry, Inflation, New Keynesian Phillips curve, Optimal monetary policy, Staggered prices",
author = "F. Etro and L. Rossi",
year = "2015",
month = feb,
day = "28",
doi = "10.1016/j.jedc.2014.10.009",
language = "English",
volume = "51",
pages = "318--340",
journal = "Journal of Economic Dynamics and Control",
issn = "0165-1889",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - New-Keynesian Phillips curve with Bertrand competition and endogenous entry

AU - Etro, F.

AU - Rossi, L.

PY - 2015/2/28

Y1 - 2015/2/28

N2 - We derive a New Keynesian Phillips curve under Calvo staggered pricing and endogenous market structures with Bertrand competition. Both strategic interactions and endogenous business creation strengthen the nominal rigidities. Price adjusters change their prices less when there are more direct competitors that do not adjust, which reduces the slope of the Phillips curve. Current and future firms entering in the markets decrease current inflation because they reduce markups and the welfare-based price index. Endogenous entry amplifies the impact of both monetary and supply shocks. We also characterize the optimal social planner allocation, that can be replicated with a labor subsidy and a dividend tax (both decreasing in the number of firms) and zero producer price inflation. The optimal Ramsey allocation implies zero inflation tax in steady state.

AB - We derive a New Keynesian Phillips curve under Calvo staggered pricing and endogenous market structures with Bertrand competition. Both strategic interactions and endogenous business creation strengthen the nominal rigidities. Price adjusters change their prices less when there are more direct competitors that do not adjust, which reduces the slope of the Phillips curve. Current and future firms entering in the markets decrease current inflation because they reduce markups and the welfare-based price index. Endogenous entry amplifies the impact of both monetary and supply shocks. We also characterize the optimal social planner allocation, that can be replicated with a labor subsidy and a dividend tax (both decreasing in the number of firms) and zero producer price inflation. The optimal Ramsey allocation implies zero inflation tax in steady state.

KW - Bertrand competition

KW - Endogenous entry

KW - Inflation

KW - New Keynesian Phillips curve

KW - Optimal monetary policy

KW - Staggered prices

U2 - 10.1016/j.jedc.2014.10.009

DO - 10.1016/j.jedc.2014.10.009

M3 - Journal article

VL - 51

SP - 318

EP - 340

JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

SN - 0165-1889

ER -