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- Title
MONOPOLISTIC COMPETITION AS A FOUNDATION FOR KEYNESIAN MACROECONOMIC MODELS.
- Authors
Startz, Richard
- Abstract
A general equilibrium macroeconomic model based on monopolistic competition is presented. The model exhibits a traditional multiplier in the short run, but due to free entry, the multiplier disappears in the long run. By construction all agents are fully rational. The Keynesian results are a consequence of the assumption of monopolistic competition, which creates a divergence between optimal private behavior and optimal social behavior.
- Subjects
MONOPOLISTIC competition; KEYNESIAN economics; ECONOMIC models; MACROECONOMICS; ECONOMETRICS
- Publication
Quarterly Journal of Economics, 1989, Vol 104, Issue 4, p737
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/2937865