In today's monetary dialogue I asked @Lagarde about profits driving inflation: (1) she acknowledged the existence of this effect, (2) deplored the lack of data on profits and (3) called on competition authorities to look at price behaviours (below the threshold of abuse):👇
🐦🔗: https://n.respublicae.eu/repasi/status/1665808613359665157
1/ I fully agree with @Lagarde's understanding of the situation: profits can drive inflation as was also shown in a remarkable paper by @IsabellaMWeber and Evan Wasner for the US:
RT @IsabellaMWeber: Corporate concentration is a possible explanation of price and profit hikes driving inflation. But concentration was high before inflation. So, why can firms hike prices in an emergency? We explore this question in a new working paper. A 🧵https://scholarworks.umass.e…
🐦🔗: https://n.respublicae.eu/repasi/status/1665808617759490050
3/ An example for that is the proposal to reform the German Cartel Law by @BMWK and @sven_giegold: market investigation and resulting intervention tools:
RT @sven_giegold: 1⃣ Das @Kartellamt kann nach einer Sektoruntersuchung Abhilfemaßnahmen beschließen. Das ist weiteres scharfes Schwert, weil nicht mehr der Missbrauch einer marktbeherrschenden Stellung nachgewiesen werden muss. Schon die erhebliche, fortwährende Störung des Wettbewerbs genügt.
🐦🔗: https://n.respublicae.eu/repasi/status/1665808621920309248
4/ These matters will also be addressed by the Parliament's Annual Competition Policy Report, for which I was the rapporteur and which will be debated and adopted next week in Strasbourg: https://www.europarl.europa.eu/doceo/document/A-9-2023-0183_EN.html
🐦🔗: https://n.respublicae.eu/repasi/status/1665808624000663557
2/ When rising profits are the result of market power, the @ecb cannot do much with its monetary tools. She rightly calls on competition authorities to act and have the necessary tools to intervene even if price increases are not the result of abusive practices.
🐦🔗: https://n.respublicae.eu/repasi/status/1665808620104081410