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Unpublished Paper
Modelling entry costs: does it matter for business cycle transmission?
  • Lilia Cavallari, University of Rome III
This paper studies the business cycle implications of entry costs in a dynamic stochastic general equilibrium model with firm entry and nominal rigidity. Simulations show that my baseline model matches the dynamics observed in the data fairly well. Remarkably, it overcomes the well-known difficulties of business cycle models in reproducing the persistence, smoothness and cyclicality of macroeconomic aggregates. I stress that capital entry costs are essential for these results.
  • entry costs,
  • firm entry,
  • business cycle,
  • investment costs
Publication Date
Citation Information
Lilia Cavallari. "Modelling entry costs: does it matter for business cycle transmission?" (2012)
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