Inflation and measures of the markup

Anindya Banerjee, Bill Russell

    Research output: Working paperDiscussion paper

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    Abstract

    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.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2002

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.130
    ISSN (Print)1473-236X

    Keywords

    • Inflation
    • Prices
    • Markup
    • Productivity
    • Business cycles
    • Cointegration

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