We study the dynamics of an industry subject to aggregate demand shocks where the productivity of a firm's technology evolves stochastically over time. Each period, each firm, given the aggregate demand shock, the productivity of its technology, and the distribution of technology productivities...

A large literature seeks to provide microfoundations of price setting for macro models. A challenge has been to develop a model in which monetary policy shocks have the highly persistent effects on real variables estimated by many studies. Nominal price stickiness has proved helpful but not...

It is a stylized fact that product prices tend to react faster to an increase in costs of intermediate inputs, than to a decrease. This study uses scanner data of retailers in an emerging economy, Kazakhstan, to analyze how large exchange rate shocks impact consumer prices. Consistent with...

In many countries, market power in goods markets has increased over the last decades. To examine the implications for monetary policy, we present a menu-cost model with endogenous markups. This model rationalizes the observed increases in market power via productivity increases for some firms....

We combine two data sets to study price rigidity. The first consists of weekly time series of retail, wholesale, and spot prices for twelve products. These time series contain two exogenous cost shocks. We find that prices exhibit more rigidity in response to the second shock than the first. The...

Exchange rate and other macroeconomic fluctuations can be considered sources of good or bad “luck” for corporate performance. Incentive effects of performance-based compensation for management may be weakened or biased by macroeconomic influences on remuneration depending on the ability of...

This paper examines the effect of demand on productivity. We exploit the Energy Policy Act of 2005 as a natural experiment which generated plausibly exogenous variation in the capacity of ethanol plants to establish the causal effect of demand on productivity within the corn sector. Using...

We use local projections with granular instrumental variables to estimate the aggregate pass-through of costs into prices and how it is affected by industry concentration. On average, we find, prices increase above trend growth for three quarters after an exogenous cost shock, and the price...

This paper uses barcode-level price data for 16 advanced and emerging market countries over the period 2005-2022 to investigate the role of individual firms and product categories in aggregate inflation. We decompose inflation into the component due to macroeconomic shocks and the granular...

Do firms respond to cost shocks by reducing the quality of their products? Using microdata from a large Russian retailer that refreshes its product line twice-yearly, we document that higher quality products are more profitable than lower quality ones, but that the number of high quality...