In contrast to recent 'neo-Schumpeterian' models, which argue that business cycles are good for growth, the authors develop a 'neo-Keynesian' model, where monopolistically competitive firms set prices and produce output in advance of the realization of (stochastic) monetary velocity. In such a...

This paper presents a simple macroeconomic model in which firms outputs are imperfect substitutes, and explores the macroeconomic implications of monopolistic co mpetition. The model is classical in some respects, but Keynesian in others. Multiple or unstable equilibria are not unlikely....