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Abstract

Since the 1970-s, firms struture have changed to fit the Globalization of the Market. Some firmshave suffered from increased competition, whereas others, generally big ones in the Business toConsumer sector, have enjoyed a decrease in competition. The market power of firms can affectthe monetary policy trade-off between output volatility and price volatility. This trade-off isgenerally studied with the New Keynesian Philips Curve equation, which can be obtained byassuming Calvo or Rotemberg price setting assumptions. Both can involved a market powerparameter. But the Calvo model fails to predict the increase of price volatility on markets, likemanufactured goods, where competition has denitively increased. By using the Rotembergassumption and modelling firms according to the Theory of rm Literature, the model generatesthe Great Moderation, only if we assume a global rise of the markup in OECD economies sincethe beginning of the 1980-s. It also generates two other stylized facts since the beginning ofthe 1980-s: a rise in wage variability and in labor variability relative to output variability. Thissimple model replicates a value of the NKPC quite close from empirical estimations since the1990-s. The model steady state with a higher value of mark-up since 1980 supports the factthat inequalities are higher since the Great Moderation. To finish, it gives a simple explanationfor the barely growth of median wage compare to the growth of global productivity.



Item Type: MPRA Paper -

Original Title: Has the Globalisation really generated more competition in OECD economies-

Language: English-

Keywords: Great Moderation, New keynesian model, Market structure-

Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; CyclesF - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International BusinessE - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - ProductionF - International Economics > F0 - General > F01 - Global OutlookE - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General-





Autor: Jambu, Marc-Antoine

Fuente: https://mpra.ub.uni-muenchen.de/20598/







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