South Africa: The Cyclical Behavior of the Markups and its Implications for Monetary Policy
AbstractThe study looks at the cyclical behavior of the markups and assesses its impact on inflation dynamics. The analysis finds that the aggregate level of the private sector's markup is relatively high, thus pointing to the lack of strong competition in South Africa's product markets. Additionally, the results suggest that the markups tend to move in a countercyclical manner, with a short-term positive impact on inflation. This implies that the countercyclical pattern of the markups is one factor among others that contribute to the relatively weak output gap-inflation co-movement. In the context of South Africa's inflation targeting framework, the counter-cyclical markups may also generate an asymmetric response of monetary policy to the fluctuations in economic activity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/204.
Date of creation: 01 Aug 2011
Date of revision:
Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-09-22 (Africa)
- NEP-ALL-2011-09-22 (All new papers)
- NEP-HME-2011-09-22 (Heterodox Microeconomics)
- NEP-MAC-2011-09-22 (Macroeconomics)
- NEP-MON-2011-09-22 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gottfries, Nils, 1991. "Customer Markets, Credit Market Imperfections and Real Price Rigidity," Economica, London School of Economics and Political Science, vol. 58(231), pages 317-23, August.
- Banerjee, Anindya & Russell, Bill, 2005.
"Inflation and measures of the markup,"
Journal of Macroeconomics,
Elsevier, vol. 27(2), pages 289-306, June.
- Christopher Bowdler & Eilev S. Jansen, 2004.
"Testing for a time-varying price-cost markup in the Euro area inflation process,"
2004-W10, Economics Group, Nuffield College, University of Oxford.
- Christopher Bowdler & Eilev S. Jansen, 2004. "Testing for a time-varying price-cost markup in the Euro area inlation process," Working Paper 2004/9, Norges Bank.
- Bowdler, Christopher & Jansen, Eilev S., 2004. "Testing for a time-varying price-cost markup in the Euro area inflation process," University of California at San Diego, Economics Working Paper Series qt4s75w541, Department of Economics, UC San Diego.
- Christopher Bowdler & Eilev S. Jansen, 2004. "Testing for a time-varying price-cost markup in the Euro area inflation process," Economics Series Working Papers 2004-W10, University of Oxford, Department of Economics.
- Christopher Bowdler & Eilev S. Jansen, 2004. "Testing for a time-varying price-cost markup in the Euro area inflation process," Working Paper Series 4004, Department of Economics, Norwegian University of Science and Technology, revised 11 May 2004.
- Robert S. Chirinko & Steven M. Fazzari, 2000.
"Market Power and Inflation,"
The Review of Economics and Statistics,
MIT Press, vol. 82(3), pages 509-513, August.
- Machin, Stephen & Van Reenen, John, 1993. "Profit Margins and the Business Cycle: Evidence from UK Manufacturing Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 41(1), pages 29-50, March.
- Jón Steinsson, 2000.
"Optimal monetary policy in an economy with inflation persistence,"
wp11, Department of Economics, Central bank of Iceland.
- Steinsson, Jon, 2003. "Optimal monetary policy in an economy with inflation persistence," Journal of Monetary Economics, Elsevier, vol. 50(7), pages 1425-1456, October.
- Johannes Fedderke & Chandana Kularatne & Martine Mariotti, 2007.
"Mark-up Pricing in South African Industry,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 16(1), pages 28-69, January.
- Johannes Fedderke & Gabor Szalontai, 2005.
"Industry Concentration in South African Manufacturing Industry: Trends and Consequences, 1972-96,"
23, Economic Research Southern Africa.
- Fedderke, Johannes & Szalontai, Gábor, 2009. "Industry concentration in South African manufacturing industry: Trends and consequences, 1972-96," Economic Modelling, Elsevier, vol. 26(1), pages 241-250, January.
- Benabou, Roland, 1992.
"Inflation and markups : Theories and evidence from the retail trade sector,"
European Economic Review,
Elsevier, vol. 36(2-3), pages 566-574, April.
- Benabou, R., 1991. "Inflation and Markups: Theories and Evidence from the Retail Trade Sector," Working papers 587, Massachusetts Institute of Technology (MIT), Department of Economics.
- Katharine S. Neiss, 2001. "The markup and inflation: evidence in OECD countries," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 570-587, May.
- Philippe Aghion & Matias Braun & Johannes Fedderke, 2008.
"Competition and productivity growth in South Africa,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 16(4), pages 741-768, October.
- Aghion, Philippe & Braun, Matias & Fedderke, Johannes, 2008. "Competition and Productivity Growth in South Africa," Scholarly Articles 3350068, Harvard University Department of Economics.
- Philippe Aghion & Matias Braun & Johannes Fedderke, 2007. "Competition and Productivity Growth in South Africa," Working Papers 54, Economic Research Southern Africa.
- Macallan, Clare & Millard, Stephen & Parker, Miles, 2008. "The cyclicality of mark-ups and profit margins for the United Kingdom: some new evidence," Bank of England working papers 351, Bank of England.
- Haskel, Jonathan & Martin, Christopher & Small, Ian, 1995. "Price, Marginal Cost and the Business Cycle," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 25-41, February.
- Liew, Freddy, 2012. "Forecasting inflation in Asian economies," MPRA Paper 36781, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).
If references are entirely missing, you can add them using this form.