The Aggregate Effects of Changes in Market Power in the United States
We estimate the dynamic causal effects of changes in market power using an instrumental variables approach. We build an instrument for changes in market power on the basis of the asset price implications of antitrust activity. We produce a narrative account of Department of Justice and Federal Trade Commission case filings for antitrust activities for a sample that starts in 1965. We then use criminal and civil non-merger case filings to estimate the impact on excess equity returns of firms – and their competitors – listed on the SEC that are investigated for antitrust. We find that antitrust investigations trigger negative excess returns for firms that are investigated and positive excess returns for their competitors. We convert these excess returns into dollar values and use them as instruments for changes in market power and find that lower market power stimulates aggregate output, consumption, and investment and is associated with lower inflation.
Date:
7 November 2023, 13:15 (Tuesday, 5th week, Michaelmas 2023)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room A or https://zoom.us/j/99960790792?pwd=L01NVnBQcGlqMVdQMHBiWDN3YmFMZz09
Speaker:
Morten Ravn (UCL)
Organising department:
Department of Economics
Part of:
Macroeconomics Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Shreyasi Banerjee
