Markups and inflation in oligopolistic markets : evidence from wholesale price data / by Patrick Alexander, Lu Han, Oleksiy Kryvtsov and Ben Tomlin.: FB3-5/2024-20E-PDF
"We study how the interaction of market power and nominal price rigidity influences inflation dynamics. We formulate a tractable model of oligopolistic competition and sticky prices and derive closed-form expressions for the pass-through of idiosyncratic and common cost shocks to firms' prices. Using unpublished micro data for Canadian wholesale firms, we estimate that the pass-through of idiosyncratic costs is incomplete at 70% and independent of the degree of sector-price-stickiness. The pass-through of common costs declines with price stickiness, from nearly complete in flexible-price sectors to below 70% in sectors with the stickiest prices. An increase in the degree of sector or firm market power reduces the pass-through of both types of cost shocks. These estimates imply a degree of strategic complementarity that lowers the slope of the New Keynesian Phillips curve by 30% in a one-sector model and by 74% in a multi-sector model"--Abstract, page ii.
Permanent link to this Catalogue record:
publications.gc.ca/pub?id=9.942548&sl=0
| Department/Agency | Bank of Canada, issuing body. |
|---|---|
| Title | Markups and inflation in oligopolistic markets : evidence from wholesale price data / by Patrick Alexander, Lu Han, Oleksiy Kryvtsov and Ben Tomlin. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2024-20 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | ISSN assigned to different series. "Last updated: May 28, 2024." Includes bibliographical references (pages 35-38). Includes abstracts in English and French. |
| Publishing information | [Ottawa] : Bank of Canada = Banque du Canada, 2024. ©2024 |
| Author / Contributor | Alexander, Patrick D., author. |
| Description | 1 online resource (ii, 80, that is, ii, 79 pages) : illustrations (chiefly colour). |
| Catalogue number |
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| Subject terms | Inflation (Finance) -- Canada -- Econometric models. Wholesale trade -- Prices -- Canada -- Econometric models. Transmission mechanism (Monetary policy) -- Canada -- Econometric models. Inflation -- Canada -- Modèles économétriques. Commerce de gros -- Prix -- Canada -- Modèles économétriques. Mécanismes de transmission (Politique monétaire) -- Canada -- Modèles économétriques. |
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