Customer Capital, Markup Cyclicality, and Amplification
This paper studies the importance of firm-level price markup dynamics for business cycle fluctuations. Using state-of-the-art IO techniques to measure the behavior of markups over the business cycle at the firm level, I find that markups are countercyclical with an average elasticity of -1.1 with respect to real GDP. Importantly, I find substantial heterogeneity in markup cyclicality across firms, with small firms having significantly more counter-cyclical markups than large firms. Then, I develop a general equilibrium model by embedding customer capital (due to deep habits as in Ravn, ...
Markup Cyclicality: A Tale of Two Models
Many models in the business cycle literature generate counter-cyclical price markups. This paper examines if the prominent models in the literature are consistent with the empirical findings of micro-level markup behavior in Hong (2016). In particular, I test the markup behavior of the following two models: (i) an oligopolistic competition model, and (ii) a New Keynesian model with heterogeneous price stickiness. First, I explore the Atkeson and Burstein (2008) model of oligopolistic competition, in which markups are an increasing function of firm market shares. Coupled with an exogenous ...
Moving In, Moving Out: The Migration Pattern of the Eighth District
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Since 1994, startup firms have seen their share of U.S. employment shrink.
How Important Are Production Networks to the U.S. Economy?
As manufacturing grows more sophisticated, industries become more interconnected through production networks.
60% of District's Jobs Could Face Automation in the Next 20 Years
Jobs in the St. Louis Fed?s District face a higher risk of automation than do jobs nation-wide. Smaller MSAs in the District will face bigger impact.
Mapping the U.S. Production Network: Identifying Hub Industries
Identifying key suppliers and buyers could help identify the cause of certain economic downturns.
The Impact of Automation on Inequality
Occupations with large employment and low income have a higher automation probability.
Industry Connectivity: A Case Study of the Construction Industry
Industries most related to the construction industry were hit harder by the Great Recession.
Firms’ Price-Markup Dynamics During the Great Recession
The customer capital model is consistent with Great Recession markup dynamics.