02225cas a2200337 a 4500 AALejournalIMF022342 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513588001 1018-5941 BD-DhAAL BD-DhAAL Duval, Romain. Market Power and Monetary Policy Transmission / Romain Duval, Davide Furceri, Raphael Lee, Marina M. Tavares. Washington, D.C. : International Monetary Fund, 2021. 1 online resource (56 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We show that firms' market power dampens the response of their output to monetary policy shocks, using firm-level data for the United States and a large cross-country firm-level dataset for 14 advanced economies. The estimated impact of a firm's markup on its response to a monetary policy shock is large enough to materially affect monetary policy transmission. We also find some evidence that the role of markup in monetary policy transmission, while independent from other channels, is greater for firms whose characteristics - notably size and age - are likely to be associated with greater financial constraints. We rationalize these findings through a simple partial equilibrium model in which borrowing constraints amplify disproportionately low-markup firms' responses to changes in interest rates. Mode of access: Internet Central Banks and Their Policies imf Market Structure and Pricing imf Monetary Policy imf Production, Pricing, and Market Structure imf Size Distribution of Firms imf Furceri, Davide. Lee, Raphael. M. Tavares, Marina. IMF Working Papers; Working Paper ; No. 2021/184 Full text available on IMF http://elibrary.imf.org/view/journals/001/2021/184/001.2021.issue-184-en.xml IMF e-Library