Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296760 
Year of Publication: 
2023
Series/Report no.: 
ADBI Working Paper No. 1365
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
This paper empirically examines the effect of corporate market power on monetary policy transmission in Asia. Using panel local projections based on a firm-level dataset for 11 advanced and emerging Asian economies, we find that after a monetary policy tightening, the real sales of firms with low market power significantly decline, while real sales of firms with high market power respond little. Moreover, we find that the average responses of firms'real sales to monetary policy shocks are driven by firms with low markups. Our findings indicate that rising market power impairs the effective transmission of monetary policy. We discuss the implications in terms of balancing the need for industrial policies that promote innovation-led productivity against effective competition policy to compress heterogeneity in market power dynamics and enhance the monetary policy transmission mechanism.
Subjects: 
corporate market power
monetary policy transmission
Asia
JEL: 
E52
D43
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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