well suited to analyze price dynamics in the economy with multiproduct firms. To guide new theory, we study a unique …

) relationship between the standard deviation (coefficient of variation) and the average in bank lending-rate markups. In a … quantitative theory consistent with these empirical observations, banks' lending market power is determined in equilibrium and is a … novel channel of monetary policy. At low inflation, banks tend to extract higher markups from existing loan customers rather …

) they increase the relative markup of firms with stickier prices, and (iii) firms with stickier prices have higher markups … with more rigid prices optimally set higher markups and their markups increase by more after monetary policy shocks. The …