This paper develops a general equilibrium framework for aggregate price dynamics incorporating industry competition and forward-looking rational expectations. It accounts for differences in pricing power across firms and allows for size-dependent shocks. The model builds upon a set of established facts. Industry leaders are usually much larger than other firms and charge a higher markup. They focus on preserving market share and their pricing behavior differs. They limit the pass-through of idiosyncratic cost shocks, but are strategic and match price changes by rivals. Meanwhile, trailing firms are generally much smaller and set prices monopolistically. On this basis, the framework yields several key results. First, due to strategic complementarity in pricing, the implied cost pass-through for industry leaders after an aggregate shock is around 25 percent higher than for an idiosyncratic shock, which aligns with evidence from Gödl-Hanisch and Menkhoff (2023). Second, aggregate shocks have an uneven impact across firms. Industry leaders and trailing firms face different demand schedules and adjust prices accordingly. In general, small firms appear more sensitive to the business cycle. Finally, if a negative shock affects small firms more, industry leaders raise prices, resulting in `excess’ profits. In this case, the additional markup distortion amplifies the underlying shock by 25 percent.

This paper links higher markups to the decline in US interest rates over the past three decades. Markups are generally seen as a tax on the other factors of production, reducing capital and labor demand. Business income accrued to households at the top of the income distribution, which also have a high marginal propensity to save. A simple model accounting for the effect of growing income inequality on saving behavior demonstrates a markup shock can have a relatively large impact on the equilibrium interest rate due to lower capital demand and a higher saving supply.

This paper estimates the share of FDI subject to additional tax following the implementation of BEPS Pillar Two, accounting for the presence of low-tax affiliates in high-tax countries. It first considers the scope of the new rules, where both the characteristics of the overall MNE group and its affiliates matter. There are two main findings: (i) large MNEs account for most foreign investment and (ii) low-tax affiliates often hold a disproportionate share of the FDI stock, even in countries where average or statutory tax rates are high.

This paper assesses the macroeconomic and welfare effects of a tax reform in an emerging economy. We develop a dynamic general equilibrium model matching the structural characteristics of Morocco.

The process of structural transformation is stagnant in many developing economies. This wedge between observed and optimal labor allocations suggests the presence of institutional and market frictions, which impose costs on the reallocation of labor from low to high productivity sectors. Using a panel of crosscountry sector-level data, we estimate a dynamic panel error correction model that captures the dynamic adjustment of labor flows across sectors.

In 2014 there were more than 14 million refugees worldwide and almost a million places for permanent resettlement were needed. This article reviews administrative and survey data on the characteristics and integration outcomes of refugees resettled in the United States, Canada and Scandinavia.