1991 Chapters (Layout Features)

Markups and the Business Cycle

Rotemberg, Julio J.; Woodford, Michael

From page 63 -- 'Perfectly competitive models of the effects of aggregate demand variations on output and employment have great difficulty generating patterns of comovement among aggregate variables that resemble typical 'business cycle' patterns (Barro and King, 1984). We wish to emphasize two such difficulties here, and to argue that an imperfectly competitive model of product markets can avoid these difficulties.'