macroeconomics of subsistence points
By: Morten O. Ravn, Stephanie Schmitt-Grohe, Martin Uribe.
Contributors: Schmitt-Grohe, Stephanie.; Uribe, Martin.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 11012.; Working paper series (National Bureau of Economic Research) -- working paper no. 11012.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 14
Subjects: Subsistence economy -- Econometric models
Description: "This paper explores the macroeconomic consequences of preferences displaying a subsistence point. It departs from the existing related literature by assuming that subsistence points are specific to each variety of goods rather than to the composite consumption good. We show that this simple feature makes the price elasticity of demand for individual goods procyclical. As a result, markups behave countercyclically in equilibrium. This implication is in line with the available empirical evidence"--National Bureau of Economic Research web site.
Notes: "December 2004."

Includes bibliographical references (p. 14).

Also available in PDF from the NBER world wide web site (www.nber.org).