Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles

17 Pages Posted: 26 May 2004

See all articles by Kala Krishna

Kala Krishna

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Cemile Sahin

affiliation not provided to SSRN

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Abstract

In this paper, we show that lumpy consumer durables and market power can generate endogenous cycles consistent with the facts. Past sales determine the current market size of durable goods. Larger past sales, ceteris paribus, thus, naturally, result in a smaller current market size and income. In this manner, the seeds of a downturn are sown in an upturn.

JEL Classification: E32, E13

Suggested Citation

Krishna, Kala and Sahin, Cemile, Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles. Available at SSRN: https://ssrn.com/abstract=531747

Kala Krishna (Contact Author)

Pennsylvania State University - Department of Economics ( email )

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Cemile Sahin

affiliation not provided to SSRN

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