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The mark-ups in the Spanish economy: international comparison and recent evolution

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  • Ángel Estrada

    ()
    (Banco de España)

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    Abstract

    This paper estimates the steady state mark-ups of 23 branches of activity in seven developed countries (USA, Japan, Germany, France, UK, Italy and Spain). The empirical methodology departs from the Hall (1988) seminal approach and incorporates the possibility of non-competitive labour markets. Besides, it is used a time varying parameter (TVP) estimation technique in order to compute the evolution of steady state mark-ups. Looking at the constant parameter estimations, it emerges a clear dichotomy between two groups of countries: USA and UK, with the lowest mark-ups, and Japan and Germany, in the other side of the spectrum; Italy and Spain keep an intermediate position. With respect to the bargaining power of trade unions, the dichotomy between Anglo-Saxon countries, where it is almost inexistent, and Central European countries is even more marked. Allowing these parameters to evolve in time, the results are also interesting: there have been increases in mark ups in Italy, France and Germany; on the contrary, in USA, Japan, UK and Spain they have diminished. In the case of the bargaining power of the trade unions, all these countries have shown reductions since 1980, with the only exception of Germany. Finally, the paper finds a quite robust inverse relation between productivity growth, mark ups and the bargaining power of trade unions, although the quantitative effects are moderated.

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    File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/09/Fic/dt0905e.pdf
    File Function: First version, April 2009
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    Bibliographic Info

    Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0905.

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    Length: 53 pages
    Date of creation: Apr 2009
    Date of revision:
    Handle: RePEc:bde:wpaper:0905

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    Keywords: Mark-ups; labour market; productivity;

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    13. Kim, Chang-Jin, 2006. "Time-varying parameter models with endogenous regressors," Economics Letters, Elsevier, vol. 91(1), pages 21-26, April.
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