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Industry structure and the dynamics of price adjustment

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  • Anindya Banerjee

Abstract

Using annual US data for gross domestic product originating by sector between 1947 and 1997 it is shown that a negative long-run relationship between inflation and the markup is present across the sectors as well as in the aggregate data. A preliminary explanation based on industry structure is explored for the relative sizes of the impact of inflation on the markup in the long-run for the various sectors.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840010021131
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 33 (2001)
Issue (Month): 15 ()
Pages: 1889-1901

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Handle: RePEc:taf:applec:v:33:y:2001:i:15:p:1889-1901

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References

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  1. Banerjee, A. & Russell, B., 2000. "The Relationship between the Markup and Inflation in the G7 plus One Economies," Economics Working Papers eco2000/7, European University Institute.
  2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
  3. Chatterjee, Satyajit & Cooper, Russell, 1989. "Multiplicity of Equilibria and Fluctuations in Dynamic Imperfectly Competitive Economies," American Economic Review, American Economic Association, vol. 79(2), pages 353-57, May.
  4. Kyle Bagwell, 2004. "Collusion and Price Rigidity," Theory workshop papers 658612000000000081, UCLA Department of Economics.
  5. Bodie, Zvi, 1976. "Common Stocks as a Hedge against Inflation," Journal of Finance, American Finance Association, vol. 31(2), pages 459-70, May.
  6. Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1987. "Oligopoly Supergames: Some Empirical Evidence on Prices and Margins," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 379-98, June.
  7. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Business Cycles and the Relationship Between Concentration and Price-Cost Margins," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 1-17, Spring.
  8. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
  9. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  10. Geroski, P. A., 1983. "Some reflections on the theory and application of concentration indices," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 79-94, March.
  11. Yu-Fu Chen & Bill Russell, 1998. "A Profit Maximising Model Of Disequilibrium Price Adjustment With Missing Information," Dundee Discussion Papers in Economics 092, Economic Studies, University of Dundee.
  12. Carlin, Wendy & Soskice, David, 1990. "Macroeconomics and the Wage Bargain: A Modern Approach to Employment, Inflation, and the Exchange Rate," OUP Catalogue, Oxford University Press, number 9780198772446.
  13. Bill Russell & Jonathan Evans & Bruce Preston, . "The Impact Of Inflation and Uncertainty On The Optimum Price Set By Firms," Dundee Discussion Papers in Economics 084, Economic Studies, University of Dundee.
  14. Banerjee, A. & Russell, B., 2000. "The Markup and the Business Cycle Reconsidered," Economics Working Papers eco2000/21, European University Institute.
  15. Henley, Andrew, 1994. "Industrial Deconcentration in U.K. Manufacturing since 1980," The Manchester School of Economic & Social Studies, University of Manchester, vol. 62(1), pages 40-59, March.
  16. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
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Citations

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Cited by:
  1. Banerjee, Anindya & Russell, Bill, 2004. "A reinvestigation of the markup and the business cycle," Economic Modelling, Elsevier, vol. 21(2), pages 267-284, March.
  2. Jonsson, Magnus & Palmqvist, Stefan, 2003. "Inflation, Markups and Monetary Policy," Working Paper Series 148, Sveriges Riksbank (Central Bank of Sweden).
  3. Bill Russell & Anindya Banerjee & Issam Malki & Natalia Ponomareva, 2010. "A Multiple Break Panel Approach To Estimating United States Phillips Curves," Dundee Discussion Papers in Economics 232, Economic Studies, University of Dundee.
  4. Bill Russell, Anindya Banerjee, 2006. "The Long-Run Phillips Curve and Non-Stationary Inflation," Economics Working Papers ECO2006/16, European University Institute.
  5. Anindya Banerjee & Bill Russell, 2002. "Inflation and Measures of the Markup," Dundee Discussion Papers in Economics 130, Economic Studies, University of Dundee.
  6. Nicolas Canry & Julien Fouquau & Sébastien Lechevalier, 2007. "Price Dynamics in Japan (1981-2001): A StructuralAnalysis of Mechanisms in the Goods and LaborMarkets," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00140624, HAL.
  7. Bill Russell, 2002. "The Long Run Relationships among Price Variability, Inflation and the Markup," Dundee Discussion Papers in Economics 127, Economic Studies, University of Dundee.
  8. Banerjee, Anindya & Mizen, Paul & Russell, Bill, 2007. "Inflation, relative price variability and the markup: Evidence from the United States and the United Kingdom," Economic Modelling, Elsevier, vol. 24(1), pages 82-100, January.

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