June 30, 2023
Firm dynamics
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Markups and inflation during the COVID-19 pandemic
We find that prices and costs for consumer-oriented firms moved roughly one-for-one during the COVID-19 pandemic. This means firms fully passed rising costs through to the prices they charged. However, our results are suggestive, given data limitations and the uncertainty associated with estimating markups. -
SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis
We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms’ borrowing capacity to smooth temporary shocks to liquidity.