Rising Corporate Market Power

Chen, Wenjie; Díez, Federico J.; Akcigit, Ufuk; Engler, Philipp; Fan, Jiayue; Maggi, Chiara; Tavares, Marina Mendes; Schwarz, Daniel R.; Shibata, Ippei; Villegas-Sánchez, Carolina

doi:10.5089/9781513512082.006

Cited by 31 publications

(28 citation statements)

References 15 publications

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“…An understanding of the drivers of the pass-through of labor cost to price inflation is key in particular for central banks, given their price stability mandate. We show that the decline in the pass-through is in part linked to structural trends which are unlikely to revert in the near future (in fact the increase in market power and concentration might be even exacerbated after the COVID-19 crisis, as mentioned for instance by Tenreyro (2020) or Akcigit et al (2021)).…”

Section: Non-technical Summarymentioning

confidence: 83%

“…6 Our findings have important policy implications. Given that the pass-through of labor costs to inflation appears, at least to some extent, to be linked to structural trends which are unlikely to revert in the near future (in fact the increase in market power and concentration might be even exacerbated after the COVID-19 crisis, as mentioned for instance by Tenreyro (2020) or Akcigit et al (2021)), this offers the central bank the opportunity to pursue expansionary policies without the fear of inflation via the labor cost channel, provided that inflation expectations remain well anchored. Our findings also provide supporting evidence in favour of the related recent change in the FED's monetary policy communication.…”

Section: Introductionmentioning

confidence: 99%

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The Changing Link between Labor Cost and Price Inflation in the United States

2021

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The link between US labor cost and price inflation has weakened notably over the past three decades. In this paper we document this decline and analyse potential contributing factors. We consider four important trends that have shaped the US economy of late: (i) improved anchoring of inflation expectations; (ii) the changing constellation of shocks hitting the economy; (iii) increased trade integration and (iv) rising firm market power. We find that the improved anchoring of inflation expectations has played a particularly relevant role but also that the latter two trends offer promising avenues to understand the decline in pass-through from labor cost to price inflation. Our results also bring supportive evidence to the view taken by the FED in the context of its monetary policy strategy review that a robust job market can be sustained without causing an outbreak of inflation.

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Section: Non-technical Summarymentioning

confidence: 83%

Section: Introductionmentioning

confidence: 99%

The Changing Link between Labor Cost and Price Inflation in the United States

2021

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“…For instance, De Loecker and Eeckhout (2020) find that the aggregate global markup has increased from close to 1.15 in 1980 to around 1.6 in 2016, leading to distributional consequences in terms of larger profits and lower labor shares. Moreover, recent challenges posed by the rise of digital platforms and a wave of pandemic-driven bankruptcies by smaller firms may also worsen the trend of increased market power in the future (Akcigit et al, 2021). Enriching policy makers' and researchers' understanding of the drivers of and barriers to competition is thus critical to development.…”

Section: Introductionmentioning

confidence: 99%

FDI, Market Power, and Markups: Evidence from Vietnam

Li¹,

Kuo²,

Latorre³

et al. 2022

Policy Research Working Papers

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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“…There is by now a large literature describing the new competition policies that may be required. SeeStiglitz (2019) andWu (2018), as well asAkcigit et al (2021) for an overview of emerging issues and complexities in competition policy.©International Monetary Fund. Not for Redistribution…”

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confidence: 99%

Technological Progress, Artificial Intelligence, and Inclusive Growth

Schindler¹,

Korinek²,

Stiglitz³

2021

IMF Working Papers

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Advances in artificial intelligence and automation have the potential to be labor-saving and to increase inequality and poverty around the globe. They also give rise to winner-takes-all dynamics that advantage highly skilled individuals and countries that are at the forefront of technological progress. We analyze the economic forces behind these developments and delineate domestic economic policies to mitigate the adverse effects while leveraging the potential gains from technological advances. We also propose reforms to the global system of governance that make the benefits of advances in artificial intelligence more inclusive.

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Rising Corporate Market Power

Cited by 31 publications

References 15 publications

The Changing Link between Labor Cost and Price Inflation in the United States

The Changing Link between Labor Cost and Price Inflation in the United States

FDI, Market Power, and Markups: Evidence from Vietnam

Technological Progress, Artificial Intelligence, and Inclusive Growth

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