The relationship between the markup and inflation in the G7 economies and Australia

Authors
Banerjee, A Russell, B
Citation
A. Banerjee et B. Russell, The relationship between the markup and inflation in the G7 economies and Australia, REV ECON ST, 83(2), 2001, pp. 377-384
Citations number
26
Categorie Soggetti
Economics
Journal title
REVIEW OF ECONOMICS AND STATISTICS
ISSN journal
00346535 → ACNP
Volume
83
Issue
2
Year of publication
2001
Pages
377 - 384
Database
ISI
SICI code
0034-6535(200105)83:2<377:TRBTMA>2.0.ZU;2-6
Abstract
An I(2) analysis of inflation and the markup is undertaken for the G7 econo mies and Australia. We find that the levels of prices and costs are best de scribed as I(2) processes and that, except for Japan, a linear combination of the log levels of prices and costs cointegrate to the markup that is int egrated of order 1. It is also shown that the markup in each case co-integr ates with inflation and that higher inflation is associated with a lower ma rkup in the long run.