Manufacturing price determination in OECD countries; markups, demand and uncertainty in a dynamic heterogeneous panel
AbstractManufacturing price markup equations are estimated for 15 OECD countries using annual data. Firms have CES production technology. The markup depends on demand, competitors' prices and uncertainty. Cointegration is tested with the Pedroni tests and a panel version of the Johansen test, and evidence found for unique cointegrating vectors. Estimation of the long-run parameters is performed with a pooled mean group method, with short run heterogeneous dynamics. Tests for homogeneity of the long-run parameters do not reject the hypothesis. Markups are pro-cyclical and rise with both competitors' prices and uncertainty.
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Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 168.
Date of creation: 04 Jun 2003
Date of revision:
pricing behaviour; markups; panel test for order of integration; panel cointegration; dynamic heterogeneous panels; pooled mean group estimation;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
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