workers replace less productive ones. However, in the short run, it generates sizeable labour adjustment costs (LACs …

role. But, in the presence of rising adjustment costs, measured sales-weighted markups using the recently popular indirect … exogenous processes for profits, (ii) an increase in impatience, (iii) increased market power, and (iv) increasing adjustment … costs. We identify and quantity the contribution of each of these factors building on a simulated method of moments …

aggregate levels. Sufficiently high convexity in management relative to adjustment costs is required to replicate the observed … management and adjustment costs. …