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Has the Globalisation really generated more competition in OECD economies

By Marc-Antoine Jambu

Abstract

Globalisation have generated a more or less competetive market according to the kind of rms. The Great moderation has structural causes such as market power, which is possible to study through the reduced form of the NKPC obtained with the Calvo and Rotemberg price setting assumptions. The Calvo model fails to predict the increase of price volatility on Business to Business (BotB) product markets where competition has denitively increased. By using a model with upstream and downstream rms, according to the Theory of rm Literature, where both are constraint by the Rotemberg price setting assumption, the model predicts the Great Moderation in OECD economies only if the hypothesis of an increase in the global markup is kept. Simulations replicate NKPC slope empirical estimations. This unusual hypothesis is supported by the increasing share of prot in value added, by the development of credit market in OECD countries and by the american increasing revenues inequalities. The model produces endogeneous incentives to a more exible labor market and the development of credit market. A global decreased competetive market gives an explanation of the barely growth of median wage, compare to the growth of global productivity during the period of the Great Moderation.

Topics: E32 - Business Fluctuations; Cycles, F23 - Multinational Firms; International Business, E23 - Production, F01 - Global Outlook, E20 - General
Year: 2010
OAI identifier: oai:mpra.ub.uni-muenchen.de:19974

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