The two sector model presented in this note suggests a simple structural decomposition of movements in the price of investment goods into exogenous and endogenous sources. The endogenous fluctuations arise in the presence of countercyclical markups which vary differently across the consumption...

We characterize the dispersion of firm-level productivity and demand shocks using Swedish microdata including prices and utilization and analyse the consequences for firms and the aggregate economy. Demand dispersion increases by more than TFPQ dispersion in recessions. Productivity shocks pass...

We characterize the dispersion of firm-level productivity and demand shocks over the business cycle using Swedish microdata including prices and analyse the consequences for firms and the aggregate economy. Demand dispersion increases by more than productivity dispersion in recessions....

This paper examines the implications of segmented assets markets for the real and nominal effects of monetary policy. I develop a model, in which varieties of consumption bundles are purchased sequentially. Newly injected money thus disseminates slowly through the economy via second-round...

Different methods have been used in the literature to measure and analyze price markup cyclicalbehavior. We use a medium-scale DSGE Model with positive trend inflation, in which neutral technology,the marginal efficiency of investment, and monetary policy shocks drive aggregate fluctuations and...

Firms’ market power, measured by markups, has risen substantially and unequally across sectors. To evaluate the implications of these trends for monetary non-neutrality, we develop a quantitative menu cost model that covers multiple sectors with heterogeneous degrees of market competition. Two...

In this paper, we study a new channel to explain firms' price setting behavior. We propose that uncertainty about factor prices has a positive effect on markups. We show theoretically that firms with higher shares of inputs with volatile prices set higher markups. We use the Bartik shift-share...

We consider a standard result of customer market theory: if firms have stable customer relations and face financial frictions, they may keep prices relatively high on their locked-in shoppers to maintain short-term profits at the expense of future market shares in times of low demand and vice...

Previous studies have stressed that in ation dynamics exhibit a substantial disper- sion across sectors. Using US producer price data, we present evidence that sectoral in ation persistence is negatively correlated with market concentration, which is diffi- cult to reconcile with the prediction...

We show standard methods to estimate production functions do not identify markups.This nonidentification creates spurious skewness in estimated markup distributions.We also show that ex-ante structure on the returns to scale solves the identificationproblem. In US public firm data and in a Monte...