The Missing Inflation Puzzle: The Role of the Wage‐Price Pass‐Through

Price inflation in the U.S. has been slow to pick up last two decades. We show that this missing can be traced a growing disconnect between unemployment and core goods inflation. exploit rich industry-level data weakening pass-through from wages prices goods-producing sector is an important source of pickup. develop theory where markups depend on firms' market shares increased import competition rising concentration reduce prices. find strong empirical support for these predictions.