markups increase and output falls after uncertainty shocks. The model is also used as a business cycle accounting device to … construct aggregate markups from the data. Time-series techniques are employed to study the conditional comovement between … markups and output in the data. Consistent with the model’s precautionary wage setting, we find that wage markups increase …

Precautionary pricing and increasing markups in representative-agent DSGE models with nominal rigidities are commonly … consistent with the data. Three things stand out. First, consistent with precautionary wage setting, we find that wage markups … increase after uncertainty shocks. Second, the impulse responses of price markups are largely inconsistent with the standard …