Dundee Discussion Papers in Economics 130: Inflation and measures of the markup

TY - UNPB

T1 - Dundee Discussion Papers in Economics 130

T2 - Inflation and measures of the markup

AU - Banerjee, Anindya

AU - Russell, Bill

N1 - This paper was also published by Elsevier in Journal of Macroeconomics, Vol. 27 (2), pp. 289-306

PY - 2002

Y1 - 2002

N2 - Theoretical models of the markup-inflation relationship focus on the markup of price on marginal costs in contrast with empirical models that typically focus on the markup on unit costs. Using nearly 50 years of quarterly United States data we identify a negative long-run relationship between inflation and the markup of price on unit costs on the one hand and with the markup on marginal costs on the other. We find that the impact of inflation on the marginal cost markup is larger than the impact on the unit cost markup.

AB - Theoretical models of the markup-inflation relationship focus on the markup of price on marginal costs in contrast with empirical models that typically focus on the markup on unit costs. Using nearly 50 years of quarterly United States data we identify a negative long-run relationship between inflation and the markup of price on unit costs on the one hand and with the markup on marginal costs on the other. We find that the impact of inflation on the marginal cost markup is larger than the impact on the unit cost markup.

KW - Inflation

KW - Prices

KW - Markup

KW - Productivity

KW - Business cycles

KW - Cointegration

M3 - Discussion paper

T3 - Dundee Discussion Papers in Economics

BT - Dundee Discussion Papers in Economics 130

PB - University of Dundee

ER -