Price Rigidities and the Granular Origins of Aggregate Fluctuations

Abstract

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Pipeline Pressures and Sectoral Inflation Dynamics

“…g c is set equal to the average fraction of annual Government Consumption Expenditures to Personal Consumption Expenditures in the post WWII period. Elasticities and markups are taken identical to Pasten et al (2016Pasten et al ( , 2017; Carvalho and Lee (2011). Parameters ω jj are constructed using the 1997 "Use" and "Make" tables provided by the BEA.…”

“…First, Bouakez et al (2014) and Pasten et al (2017) study the role of sectoral productivity shocks in generating aggregate ppi volatility. The former does not study the role of pipeline pressures, whereas the latter only does so theoretically.…”

“…The former does not study the role of pipeline pressures, whereas the latter only does so theoretically. Here, we bring part of the intuition of Pasten et al (2017) to the data and allow for a richer set of shocks a in less stylized set-up. 4 Close to our work is Auer et al (2017), who show in a partial equilibrium framework that international trade flows contribute substantially to synchronizing headline ppi's across countries.…”

Punish One, Teach A Hundred: The Sobering Effect of Punishment on the Unpunished

“…For instance, the punished customer might stop paying for the goods it purchased or might cancel existing orders. But this shock would have a negative effect on the local upstream SOE peers, which should result in negative CARs for SOE peers around the events (Cohen and Frazzini (2008); Ozdagli and Weber (2017); Pasten et al (2017)). Instead, we document positive CARs below for SOE peers around the punishment events.…”

Imperfect Competition in Firm-to-Firm Trade

“…Building on this result, Baqaee and Farhi (2017) analyze the importance of second order effects of firm-level TFP shocks in an efficient economy. For other papers that investigate the effects beyond Hulten (1978)'s network irrelevance result, see Altinoglu (2015), Liu (2016), and Bigio and La'o (2017), which model firms facing financial constraints, and Pasten, Schoenle, and Weber (2017), which constructs a model with price rigidities. Eaton, and Kortum (2007), which enables us to compute the counterfactual outcomes with just the observed input shares and the estimated CES parameters.…”