The Cyclical Behavior of Mark Ups in U.S. Manufacturing and Trade PDF Download
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Author: Robert Kollmann
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
An Euler condition for optimal inventory accumulation is used to obtain information on the behavior of mark ups of price over marginal cost in U.S. manufacturing and trade. Data at the two-digit SIC level are used. Mark ups appear to be procyclical in most of the two-digit SIC sectors.
Author: Robert Kollmann
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
An Euler condition for optimal inventory accumulation is used to obtain information on the behavior of mark ups of price over marginal cost in U.S. manufacturing and trade. Data at the two-digit SIC level are used. Mark ups appear to be procyclical in most of the two-digit SIC sectors.
Author: Christopher J. Nekarda
Publisher:
ISBN:
Category : Economics
Languages : en
Pages :
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Book Description
A countercyclical markup of price over marginal cost is the key transmission mechanism for demand shocks in textbook New Keynesian (NK) models. This paper re-examines the foundation of those models. We study the cyclicality of markups in the private economy as well as in detailed manufacturing industries. First, we show that frameworks for measuring markups that have produced the strongest evidence for countercyclicality produce the opposite result when we substitute new methods and data. Second, because the NK model's predictions differ by the nature of the shock, we present evidence on the cyclicality of the markup conditional on various types of shocks. Consistent with the NK model, we find that markups are procyclical conditional on a technology shock. However, we find that they are either procyclical or acyclical conditional on demand shocks. Thus, the textbook NK explanation for the effects of government spending or monetary policy is not supported by the behavior of the markup.
Author: Julio Rotemberg
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 128
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Book Description
Because inputs are scarce, marginal cost should be an increasing function of output. Without changes in this real marginal cost schedule, aggregate output can vary if and only if the markup of price over marginal cost varies. In this review, we discuss the extent to which observed fluctuations in aggregate economic activity depend upon such variations in average markups. We first study whether, empirically, real marginal cost rises in cyclical expansions. Average real labor cost is not very procyclical, but, for reasons such as overhead labor and adjustment costs, marginal labor cost should be more procyclical. Measures of marginal cost based on materials costs and inventories also appear procyclical. We next show that countercyclical markup variation may, depending upon how costs are modeled, account for a substantial fraction of cyclical output movements. We also show that the observed procyclical variations in productivity and profits are consistent with the hypothesis that cyclical variations in output are primarily due to markup variations than to shifts in the real marginal cost schedule. Finally, we survey theories of endogenous markup variation. These include both models of sticky and models in which firms' desired markup varies over time.
Author: Joaquim Oliveira Martins
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
Author: Mark Bils
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 76
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Book Description
I examine price markups in monopolisticly-competitive markets that experience fluctuations in demand because the economy experiences cyclical fluctuations in productivity. Markups depend positively on the average income of purchasers in the market. For a nondurable good average income of purchasers is procyclical; so the markup is procyclical. For a durable good. however. the average income of purchasers is likely to decrease in booms because low income consumers of the good concentrate their purchases in boom periods; so the markup is likely countercyclical. This is particularly true for growing markets. I find markups make the aggregate economy fluctuate more in response to productivity if goods are sufficiently durable.
Author:
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 804
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Author: Joaquim Oliveira-Martins
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 36
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Book Description
"In this paper, we present estimates of the mark-up of product price over marginal costs for the US manufacturing industries over the 1970-1992 period"--P. 2.
Author: Alok Johri
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Monthly, non-seasonally adjusted data are used to study markup behavior at the seasonal and business cycle frequency. The shift in focus to the monthly frequency provides an identification mechanism which helps to rule out several competing models for markup variation that would have been plausible at lower frequencies. Considerable support for collusive pricing is found by examining the monthly behavior of markups in 2-digit U.S. manufacturing industries. In particular, the hypothesis that given current demand, markups should increase when demand is expected to increase in the future is confirmed by the data.
Author: Catherine J. Morrison
Publisher:
ISBN:
Category : Markup
Languages : en
Pages : 36
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Book Description
In this paper a production theory-based model of firms' markup behavior is constructed. The theoretical structure is based on variants of generalized Leontief cost and expenditure functions. This structure yields a full specification of behavior from which the impacts of both supply and demand shocks on firms' markup behavior can be assessed through elasticities. Adjustment costs on both labor and capital and economies of scale are incorporated. Estimation is carried out using manufacturing data for the U.S. and Japan from 1960 through 1981. The empirical results suggest that markups for manufacturing firms in the U.S. and Japan have increased over time, but tend to be procyclical in the U.S. and countercyclical in Japan. This difference stems primarily from differential investment behavior. In addition, capacity utilization and especially returns to scale tend to counteract the short run profit potential from markup behavior, so that markups measured assuming constant returns may be biased downward. Finally, both supply and demand shocks appear to have a significant systematic impact on markups
Author: Carlos Daniel Santos
Publisher:
ISBN:
Category :
Languages : en
Pages : 53
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Book Description
The cyclical behavior of markups is at the center of macroeconomic debate on the origins of business-cycle fluctuations and policy effectiveness. In theory, markups may fluctuate endogenously with the business cycle due to sluggish price adjustment or to deeper motives affecting the price-elasticity of demand faced by individual producers. In this article we make use of a large firm- and product-level panel of Portuguese manufacturing firms in the 2004-2010 period. The biggest empirical challenge is to separate supply (TFP) from demand shocks. Our dataset allows to do so, by containing information on product-level prices at a yearly frequency. Furthermore, markups are mismeasured when calculated with the labor share. We use the share of intermediate inputs instead. Our main results suggest that markups are pro-cyclical with TFP shocks and generally counter-cyclical with demand shocks. We also show how markups become pro-cyclical if the markup is obtained using the labour share instead of intermediate inputs. Adjustment costs create a wedge between the labour share and the actual markup which explain the observed correlations.
