Empirical data suggest that new firms tend to grow faster than incumbent firms in terms of their productivity. A sticky-price model with learning-by-doing in new firms fits this data and predicts that for plausible calibrations, the optimal long-run inflation rate is positive and between 0.5%...

Micro-level productivity measurement suffers from unobserved markup variation when the quantities of input and outputs are proxied by nominal variables. Early literature often adjusts the revenue and input expenditure variables by aggregate price deáators, but the idiosyncratic price effects...