RT Journal Article
T1 Product Quality and Price Dynamics over the Business Cycle.
A1 Arespa-Castelló, Marta
A1 Gruber, Diego
K1 Precios
K1 Calidad
K1 Competencia económica internacional
AB Two puzzling facts of international real business cycles are (1) weak or negative correlations between the terms of trade and output, and (2) a rise in relative consumption for countries where national goods become relatively more expensive. We show that these puzzles either vanish or become much weaker in recent data. We propose a new mechanism that generates endogenous international price movements that are consistent with both the ‘old’ and the ‘new’ facts. In this mechanism, firms operating in a monopolistically competitive environment adjust price and quality of their products in response to technological shocks. This model is consistent with the old facts if price levels are not adjusted for quality. Instead, if quality adjustments to price level are introduced, then the model’s properties are in line with the new facts.
YR 2021
FD 2021-06-16
LK https://hdl.handle.net/10630/28648
UL https://hdl.handle.net/10630/28648
LA eng
NO Arespa, M. and Gruber, D. (2021), Product Quality and Price Dynamics over the Business Cycle. Economica, vol. 88 (352).
NO Spanish Ministry of Science, Innovation and Universities through the grant RTI2018-093543-B-I00, MCIU/AEI/ FEDER, UE.
DS RIUMA. Repositorio Institucional de la Universidad de Málaga
RD 26 ene 2026