Search Results
Working Paper
Firm Size, Heterogeneous Strategic Complementarities, and Real Rigidity
Recent research indicates substantial differences in price-setting behavior between small and large firms, as only large firms exhibit strategic complementarities in price setting. Using firm survey data, we present new evidence that the cost-price pass-through decreases with firm size. To examine the implications for inflation dynamics, we develop a DSGE model that features heterogeneous complementarities across firm size. While standard DSGE models with homogeneous firms generate real rigidity in relative prices, there is little such rigidity in our model. Heterogeneity in strategic ...
Discussion Paper
Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?
U.S. import tariffs increased to historically high rates in recent months, raising the costs of many imported inputs businesses use. Businesses subject to these higher costs have been faced with difficult and complex decisions about whether to absorb the tariffs through lower profits, raise their prices to recover the higher costs, or some combination of both. These decisions are influenced by the degree of competition in the marketplace, potential customer reactions, and the ability to maintain profit margins, among other factors. Our May survey of businesses in the New York–Northern New ...
Working Paper
Incomplete Pass-Through in Mortgage Markets
This paper studies the May 2023 change in the conforming mortgage upfront guarantee fee schedule. Consistent with incomplete pass-through, lenders raise rejection rates and sell fewer loans to the GSEs when fees rise. For small-dollar mortgages (SDMs), pass-through is near zero and rejection rates are more sensitive to fee increases. This implies that the overall incomplete pass-through is partly driven by liquidity-constrained borrowers and that the inequality in mortgage access via higher rejection rates on SDMs is partly driven by lenders’ inability to pass costs onto SDM borrowers. ...
How Tariffs Are Affecting Prices in 2025
A model suggests that although tariffs have been only partially passed through to consumers, they already have exerted measurable pressure on prices.
Working Paper
The Price of Delay: Supply Chain Disruptions and Pricing Dynamics
We study the role of supply chain disruptions in shaping consumer prices, focusing on both firms' own import shocks and strategic responses to competitors' disruptions. Using a newly constructed microlevel dataset that links transaction-level US import data from bills of lading with high-frequency consumer prices and sales from a consumer panel, we develop a novel approach to estimate the price effects of cost shocks and product availability. Motivated by a model of delivery delays, cost shocks, and firm pricing, we implement a shift-share identification strategy based on delivery shortfalls, ...