🔍 Bottom line:.Inflation isn’t just about too much demand or supply shocks. It’s about how markets work. Understanding market imperfections is crucial for policy.

👉 Takeaways from the model:.✅ Perfect selection → excess demand drives inflation (wage-led).✅ Imperfect selection → supply shocks amplify via profits (seller’s inflation).Both dynamics can arise from the same economy — depending on market structure & selection frictions.

Why does this matter?.In concentrated markets, big firms keep customers despite raising prices. The same economy can display different inflation dynamics depending on how imperfectly demand allocates across firms. This helps explain why post-COVID inflation differs from the 1970s.

Our model features 👥 Heterogeneous firms & workers, local interactions. 📊 Imperfect selection: consumers favor big firms, not just low prices. When goods markets select firms by price → wage-led inflation. When size dominates → seller’s (profit-led) inflation emerges.

Traditionally, inflation comes from excess demand + tight labor markets → wages & prices rise. But recent evidence suggests firms with market power amplify supply shocks by raising margins. Our model unifies these two views: imperfect firm selection is key.

In the paper we develop a new macro agent-based model to show how the same economy can generate both wage-led and profit-led (seller’s) inflation — depending on how imperfectly goods markets select firms.

I am happy that my paper on inflation dynamics, co-authored with @AndreaRoventini , Mattia Guerini, and Leonardo Ciambezi, has finally been published in the Journal of Economic Dynamics and Control. You can access the paper here:

RT @AndreaRoventini: The call for paper for the 4th Agent-Based Modelling for Policy (ABM4Policy) workshop is finally out! The workshop is….

Université Côte d'Azur is hiring 2 PhD students for its international PhD in economics, run in collaboration with Scuola Superiore Sant'Anna. Salary 2836€ gross per month (12 monthly instalments). Application deadline: 30 May 2025. More information here:.

RT @gabriel_zucman: L’entendez-vous comme moi, cette petite musique monter en puissance ? . “Pour financer le réarmement de l’Europe, il va….

Happy to share the thread about our new paper with @gianlucapallant and @AndreaRoventini published in the Journal of Financial Stability.

RT @petrini_gabriel: @ysi_commons @AlbertoRusso76 @AndreaRoventini @mrcpangallo @ale_caiani Join us in Italy, 28-29 January, 2025.Link to t….

@GREDEG_UMR.

I was thrilled to present my research at the final symposium of @ETHZSystDesign in Zürich. I owe much to my collaboration with the chair. While there, I could interact with brilliant people (e.g. @StefBattiston and @mv_tomasello just to mention two) and craft innovative papers.

RT @AndreaRoventini: Sul @ilmanifesto ho commentato la deludente legge di bilancio presentata dal governo Meloni. .

RT @lilitpopoyan: Our new paper with @GGalanis82 @mnapoletano1 @sandrosapio and @o_vardakoulias "Defining just transition" is out in Ec….

RT @zerocalcare: Per me le migliori olimpiadi degli ultimi 4 anni

RT @ofceparis: 🔴DOCUMENTING THE WIDENING TRANSATLANTIC.GAP.📍Sébastien Bock Aya Elewa @Sarah_Guillou @mnapoletano1 Lionel Nesta Even Salie….

RT @michelepezzoni: Only 10 days left to apply to the KID2024 summer school (deadline 31/3/2024). If you haven't yet applied, please do it….

Université Côte d’Azur (UCA) is hiring 2 Ph.D. students for its international Ph.D. in Economics. 2 full 4-years scholarship 2836€ gross per month .(12 monthly installments per year). Applications deadline: 31 May 2024. More information here.