In the last decades, the global economy witnessed several secular macroeconomic trends including a slowdown of aggregate output growth, persistently low investment rates, declining labor shares and rising inequality. The causes of these trends remain uncertain, though much debated.
This is the theme of the conference on “From micro to macro: market power, firms’ heterogeneity and investment”, that was jointly organised by the EIB Economics Department, the IMF, the Competitiveness Research Network (CompNet), the Halle Institute of Economic Research (IWH), and the European Network for Research on Investment (ENRI) on 18 and 19 March 2019.
Key questions that were raised:
- Does rising market power of certain firms, and firm level heterogeneity more broadly, matter for these aggregate outcomes?
- How have market power and competition among firms changed over time?
- How do input and output market structures, and particularly their effects on misallocation and innovation, affect economy wide productivity growth, inequality, factor compensation and welfare?
- What does the presence of “superstar” firms imply for aggregate outcomes and the political economy?
- How do international competition and technological change affect market power, inequality, investment decisions and aggregate productivity growth?
- Is market selection at the product/firm level functioning? If not, what are the obstacles to it and what are the implications for macro level outcomes, notably for investment?
- Do concentration and market power have a significant impact on investment decision of firms and on aggregate investment?
Following a joint call from the co-organisers to receive academic papers tackling one or more of the above outlined themes, participants and speakers discussed whether and to what extent the rising market power of certain firms and, more broadly, the heterogeneity at the firm level, matter for the aggregate outcomes.
The full conference programme and presentations from all speakers can be consulted below.