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Markup Cyclicality: Evidence From Belgian Manufacturing Firms

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  • Asmae EL GALLAA

Abstract

Countercyclical markup is a leading hypothesis in representative agent models of macroeconomic fluctuations; however, substantial heterogeneity across firms is documented at the micro-level. I test this hypothesis using an extensive firm-level data on Belgian manufacturing firms covering the period 1996-2014. I measure a firm’s markup as the wedge between its output elasticity of material inputs and their share in revenues. Consistent with recent studies challenging the findings of countercyclical markups I find that, on average, firmlevel markups appear to be procyclical. However, firms’ markups appear to be procyclical or acyclical depending on their size, age, end-use of products, and technological intensity.

Suggested Citation

  • Asmae EL GALLAA, 2018. "Markup Cyclicality: Evidence From Belgian Manufacturing Firms," Working Papers of VIVES - Research Centre for Regional Economics 627690, KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics.
    • Handle: RePEc:ete:vivwps:627690
    Note: paper number 2018.70
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    File URL: https://lirias.kuleuven.be/retrieve/518121
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    Keywords

    countercyclical markups; business cycles; production function estimation; materials share;
    All these keywords.

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