Optimal monetary policy with endogenous entry and product variety
Paris School of Economics, University of Paris 1 Panthéon-Sorbonne, and CEPR; Australian National University, CAMA, and EABCN; University of Washington, CEPR, EABCN, and NBER
New Keynesian DSGE model with endogenous firm entry, product variety, and Rotemberg quadratic price adjustment costs. Features homothetic preferences for variety (CES-DS, general CES, exponential, and translog specifications), monopolistic comp
monopolistic competition with endogenous entry, sunk entry costs, Rotemberg quadratic price adjustment costs, exogenous firm destruction probability
Figure 1 p.10
Ramsey-optimal long-run inflation under C.E.S. preferences with benefit of variety epsilon=1