Event Details

We compile a unique firm-level data set containing information on prices and real output at the monthly frequency for a sample of Swedish industrial firms for more than 20 years and use it to estimate the short and medium run responses of prices and quantities to exogenous demand shocks. Inference on the supply slope is based on an IV regression of cumulative price growth on cumulative sales using global demand shocks as instruments. Not all supply curves slope upwards. The supply curve is flatt

We compile a unique firm-level data set containing information on prices and real output at the monthly frequency for a sample of Swedish industrial firms for more than 20 years and use it to estimate the short and medium run responses of prices and quantities to exogenous demand shocks. Inference on the supply slope is based on an IV regression of cumulative price growth on cumulative sales using global demand shocks as instruments. Not all supply curves slope upwards. The supply curve is flatter for firms with low market shares, low productivity, high unit labor costs and for exporting firms. The slope of the supply curve depends also on the aggregate state of the economy: individual supply curves are steeper in times of high capacity utilization, high inflation and of low financial volatility.