This paper analyses the interplay of capacity utilisation, capacity constraints, demand constraints and price … reluctant to reduce prices in response to demand constraints. At the macro level, the implied capacity-utilisation Phillips … curve has a convex shape during periods of excess demand and a concave shape during periods of excess supply. Our results …

Combining micro and macro data, we construct demand-side shocks, which we take to be exogenous for individual firms. We … match the impulse-response functions from the estimated reduced-form model. Firms' reactions to demand-side shocks are well …