Questions about market power have become salient in macroeconomics. We consider the role of institutional structures in addressing these within a dynamic general equilibrium framework. Standard models account for monopoly profits as a lump-sum transfer to the representative agent. We label this an "incentive leakage," and show this to be a general characteristic of firm-optimal arrangements. We show that shareholder-operated or worker-operated firms that eliminate leakage can generate within-firm incentives that effectively reduce monopoly distortion in equilibrium.

What if billionaires paid their fair share—no matter where they lived?

For many corporate teams, the notion of “good conflict” is merely a myth. Most often, conflict is seen as a roadblock to success–especially when it involves clashing personalities or disagreements over strategy. But what if, in certain cases, the right kind of team conflict fuels creativity? That’s the idea behind our new research, which suggests that, handled well, some team fights might just be the key to sparking fresh ideas.

And it turns out that who is in conflict can make all the difference.

We construct a New-Keynesian E-DSGE model with energy disaggregation and financial intermediaries to show how energy-related fiscal and macroprudential policies interact in affecting the euro area macroeconomy and carbon emissions. When a shock to the price of fossil resources propagates through the energy and banking sector, it leads to a surge in inflation while lowering output and carbon emissions, absent policy interventions.