| 来源类型 | Discussion paper |
| 规范类型 | 论文 |
| 来源ID | DP17521 |
| DP17521 Competition and the Phillips Curve | |
| Ippei Fujiwara; Kiminori Matsuyama | |
| 发表日期 | 2022-07-31 |
| 出版年 | 2022 |
| 语种 | 英语 |
| 摘要 | It has been well-documented that the Phillips curve has flattened, making central bankers wary of the reduced effectiveness of monetary policy to achieve price stability. There has also been a growing concern about higher market concentration and the rising profit margins and markup rates. Are these two events observed in recent years merely coincidental? Or, are they causally related? To address this issue, this paper extends the canonical New Keynesian model by introducing markup-rate changes caused by entry and exit, under Homothetic Single Aggregator (hereafter, HSA), a class of homothetic demand systems, which contain CES and Translog as special cases. We use HSA because its single aggregator summarizes all the impacts of market concentration on the pricing behavior of monopolistically competitive firms, and thus it serves as a sufficient statistic. We show that, under Marshall’s second law of demand (i.e., the price elasticity of demand goes up with its price), market concentration leads to a rise of the markup rate, and that, under the third law of demand (i.e., the rate of increase in the price elasticity goes down with its price), market concentration leads to a decline of the pass-through rate. We demonstrate analytically that these changes in the markup rate and the pass-through rate cause the flattening of the Phillips curve. Furthermore, Marshall’s second law of demand generates the dynamic effect of competition. That is, a change in the number of firms through endogenous entry directly affects inflation rates in the New Keynesian Phillips curve, which can be interpreted as an endogenous cost-push shock. |
| 主题 | International Macroeconomics and Finance ; Monetary Economics and Fluctuations |
| 关键词 | New keynesian phillips curve Market concentration Monopolistic competition Endogenous entry |
| URL | https://cepr.org/publications/dp17521 |
| 来源智库 | Centre for Economic Policy Research (United Kingdom) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/546606 |
| 推荐引用方式 GB/T 7714 | Ippei Fujiwara,Kiminori Matsuyama. DP17521 Competition and the Phillips Curve. 2022. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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