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The Long-Run Relationship Between Inflation and the Markup in the U.S

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  • Sandeep Mazumder

    (Wake Forest University)

Abstract

This paper examines the long-run relationship between inflation and a new measure of the price-marginal cost markup. This new markup index is derived while accounting for labor adjustment costs, which a large number of the papers that estimate the markup have ignored. We then examine the long-run relationship between this markup measure, which is estimated using U.S. manufacturing data, and inflation. We find that decreases in the markup that are associated with a percentage point increase in inflation are much smaller than previous studies have found.

Suggested Citation

  • Sandeep Mazumder, 2011. "The Long-Run Relationship Between Inflation and the Markup in the U.S," Economics Bulletin, AccessEcon, vol. 31(1), pages 473-484.
    • Handle: RePEc:ebl:ecbull:eb-10-00523
    as

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    References listed on IDEAS

    as
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    Cited by:

    1. Christopher Malikane & Tshepo Mokoka, 2014. "The new Keynesian Phillips curve: endogeneity and misspecification," Applied Economics, Taylor & Francis Journals, vol. 46(25), pages 3082-3089, September.
    2. Heinrichs, Katrin & Wagner, Helmut, 2019. "Positive trend inflation and the Phillips curve – A tale of two slopes and various impulse responses," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 283-307.

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    More about this item

    Keywords

    Markup; Inflation; Marginal Cost.;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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