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Working Paper
Distribution of Market Power, Endogenous Growth, and Monetary Policy
We incorporate incumbent innovation in a Keynesian growth framework to generate an endogenous distribution of market power across firms. Existing firms increase markups over time through successful innovation. Entrant innovation disrupts the accumulation of market power by incumbents. Using this environment, we highlight a novel misallocation channel for monetary policy. A contractionary monetary policy shock causes an increase in markup dispersion across firms by discouraging entrant innovation relative to incumbent innovation. We characterize the circumstances when contractionary monetary ...
Journal Article
Credit Expansion and Markups
This article documents new empirical facts about the effects of credit expansion on the aggregate markup and markup dispersion in the United States. We use U.S. macroeconomic data and Jordà 's local projection and single-equation estimation methods. The results for both methods show that the aggregate markup and markup dispersion increase in response to both a firm debt shock and a household debt shock. The previous literature mostly focused on the effect of firm debt financing on firm markups. Extending previous research, our study shows that household credit expansion also plays a role in ...