Cost-Price Relationships in a Concentrated Economy

Falk Bräuning, Jose Fillat and Gustavo Joaquim

Current Policy Perspectives from Federal Reserve Bank of Boston

Abstract: The US economy is at least 50 percent more concentrated today than it was in 2005. In this paper, we estimate the effect of this increase on the pass-through of cost shocks into prices. Our estimates imply that the pass-through becomes about 25 percentage points greater when there is an increase in concentration similar to the one observed since the beginning of this century. The resulting above-trend price growth lasts for about four quarters. Our findings suggest that the increase in industry concentration over the past two decades could be amplifying the inflationary pressure from current supply-chain disruptions and a tight labor market.

Keywords: inflation; supply shock identification; cost-price pass-through; industry concentration (search for similar items in EconPapers)
JEL-codes: E30 E31 L11 L16 (search for similar items in EconPapers)
Pages: 9
Date: 2022-05-23
New Economics Papers: this item is included in nep-com, nep-ind, nep-mac and nep-reg
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Citations: View citations in EconPapers (6)

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Working Paper: Cost-Price Relationships in a Concentrated Economy (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedbcq:94265

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