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

Anindya Banerjee, Bill Russell

    Research output: Working paperDiscussion paper

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    Abstract

    An I(2) analysis of inflation and the markup is undertaken for the G7 economies and Australia. We find that the levels of prices and costs are best described 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 integrated of order 1. It is also shown that the markup in each case cointegrates with inflation and that higher inflation is associated with a lower markup in the long-run.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2000

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.119
    ISSN (Print)1473-236X

    Keywords

    • Inflation
    • Wages
    • Prices
    • Markup
    • I(2)
    • Polynomial cointegration

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