level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn …, in response to a firm-specific increase in marginal costs, prices rise, but by less than marginal costs leading to a … decline in the firm-specific markup of prices over marginal costs. Pass-through is predicted to be even lower when shocks to …

level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn …, in response to a firm-specific increase in marginal costs, prices rise, but by less than marginal costs leading to a … decline in the firm-specific markup of prices over marginal costs. Pass-through is predicted to be even lower when shocks to …

level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn …, in response to a firm-specific increase in marginal costs, prices rise, but by less than marginal costs leading to a … decline in the firm-specific markup of prices over marginal costs. Pass-through is predicted to be even lower when shocks to …

has received little empirical documentation regarding its demand, supply, or pricing. This paper bridges the gap. First, I …