MACRO Seminar: Timo Reinelt, San Francisco Federal

Speaker

Timo Reinelt, San Francisco Federal

Biography

I am an economist at the San Francisco Fed research department. My research is in macroeconomics and monetary economics, with a focus on firms.

From 2022-24 I worked at the ECB. I received my Ph.D. in Economics from the University of Mannheim in 2022. I also hold a Bachelor in Economics (B.Sc.) from the University of Tübingen and a Master in Economics (M.Phil.) from the University of Oxford.

Title

"Market Power and the Heterogeneous Pass-through of Corporate Taxes to Consumer Prices"

Abstract

We study the pass-through of corporate taxes into consumer prices, leveraging 1,058 municipal tax rate changes affecting 4,754 German firms. A 1 p.p. increase in a producer’s tax rate raises retail prices by 0.3% on average, consistent with imperfectly competitive producers. Product-level pass-through varies substantially, as it increases in destination-specific product and retailer-category market shares. We find little evidence linking heterogeneous passthrough to differences in retailer efficiency as reflected in relative consumer prices. Instead, our findings align with standard non-CES preferences where pass-through increasing with market shares implies weaker strategic complementarities in price setting than when this relationship is reversed.

JEL classifications: E31, F45, H25, L11

Keywords: Pass-through, Markup adjustment, Market Power, Vertical interactions, Double marginalization