Entry is widely discussed but rarely subjected to empirical study. This study develops a competitive theory of entry, with primary focus on the relationship between entry and industry growth. The main ingredients are adjustment costs to firms already in the industry and the distribution of fixed entry cost to potential entrants. The theory suggests sufficient conditions under which the entry rate is an increasing, convex function of the industry growth rate. A regression model correcting for severe heteroscedasticity is applied to data from Swedish manufacturing industries. The results are consistent with the theoretical prediction for growth and other key variables expected to influence entry significantly.

Rational expectations macromodels predict that the short-run effects of monetary shocks on real output (X) should be negatively related across policy regimes to the variability of such shocks. This paper presents cross-regime tests of this and related propositions based on a sample of 47 countries. The within-regime estimates reveal a consistent pattern of positive short-run real output effects, with neutrality of money holding in the long run. The cross-regime tests show that X is negatively related to the variance of monetary shocks, positively related to the variance of real output shocks, negatively related to the variance of velocity shocks, and unrelated to either the mean or variance of anticipated money growth.

Rational expectations macromodels predict that the short-run effects of monetary shocks on real output (X) should be negatively related across policy regimes to the variability of such shocks. This paper presents cross-regime tests of this and related propositions based on a sample of 47 countries. The within-regime estimates reveal a consistent pattern of positive short-run real output effects, with neutrality of money holding in the long run. The cross-regime tests show that X is negatively related to the variance of monetary shocks, positively related to the variance of real output shocks, negatively related to the variance of velocity shocks, and unrelated to either the mean or variance of anticipated money growth.

Entry is widely discussed but rarely subjected to empirical study. This study develops a competitive theory of entry, with primary focus on the relationship between entry and industry growth. The main ingredients are adjustment costs to firms already in the industry and the distribution of fixed entry cost to potential entrants. The theory suggests sufficient conditions under which the entry rate is an increasing, convex function of the industry growth rate. A regression model correcting for severe heteroscedasticity is applied to data from Swedish manufacturing industries. The results are consistent with the theoretical prediction for growth and other key variables expected to influence entry significantly.