THE CYCLICALITY OF MARKUPS IN A MODEL WITH ADJUSTMENT COSTS - ECONOMETRIC EVIDENCE FOR US INDUSTRY

Authors
GALEOTTI M SCHIANTARELLI F
Citation
M. Galeotti et F. Schiantarelli, THE CYCLICALITY OF MARKUPS IN A MODEL WITH ADJUSTMENT COSTS - ECONOMETRIC EVIDENCE FOR US INDUSTRY, Oxford bulletin of economics and statistics, 60(2), 1998, pp. 121
Citations number
44
Categorie Soggetti
Social Sciences, Mathematical Methods",Economics,"Statistic & Probability","Statistic & Probability
Journal title
Oxford bulletin of economics and statistics → ACNP
ISSN journal
03059049
Volume
60
Issue
2
Year of publication
1998
Database
ISI
SICI code
0305-9049(1998)60:2<121:TCOMIA>2.0.ZU;2-Y
Abstract
In this paper we investigate the impact of demand fluctuations on mark et power in US manufacturing industries. We impose on a model with adj ustment costs the minimum structure necessary to recover a measure of markups. Markups are allowed to vary with both the state and future ev olution of demand and estimates of price-cost margins are obtained fro m the Euler equation for capital. We conduct the empirical investigati on for US two-digit manufacturing industries using annual data coverin g the 1952-1985 period. We find that markups are inversely related to current;demand. However, given the state of demand, they vary directly with expectations of future demand changes.