The Long-Run Relationship Between Inflation and the Markup in the U.S
This paper examines the long-run relationship between inflation and a new measure of the price-marginal cost markup. This new markup index is derived while accounting for labor adjustment costs, which a large number of the papers that estimate the markup have ignored. We then examine the long-run relationship between this markup measure, which is estimated using U.S. manufacturing data, and inflation. We find that decreases in the markup that are associated with a percentage point increase in inflation are much smaller than previous studies have found.
Volume (Year): 31 (2011)
Issue (Month): 1 ()
|Contact details of provider:|| |
References listed on IDEAS
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.:
- 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 921-947, October.
- Robert E. Hall, 1986. "The Relation Between Price and Marginal Cost in U.S. Industry," NBER Working Papers 1785, National Bureau of Economic Research, Inc.
- Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
- Graham Elliott & Thomas J. Rothenberg & James H. Stock, 1992.
"Efficient Tests for an Autoregressive Unit Root,"
NBER Technical Working Papers
0130, National Bureau of Economic Research, Inc.
- Elliott, Graham, 1999.
"Efficient Tests for a Unit Root When the Initial Observation Is Drawn from Its Unconditional Distribution,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 767-783, August.
- Tom Doan, "undated". "ERSTEST: RATS procedure to perform Elliott-Rothenberg-Stock unit root tests," Statistical Software Components RTS00066, Boston College Department of Economics.
- James H. Stock & Mark W. Watson, 1991.
"A simple estimator of cointegrating vectors in higher order integrated systems,"
Working Paper Series, Macroeconomic Issues
91-3, Federal Reserve Bank of Chicago.
- Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
- Bill RUSSELL & Jonathan EVANS & Bruce PRESTON, 2002.
"The Impact of Inflation and Uncertainty on the Optimum Markup Set by Firms,"
Economics Working Papers
ECO2002/02, European University Institute.
- Bill Russell & Jonathan Evans & Bruce Preston, "undated". "The Impact Of Inflation and Uncertainty On The Optimum Price Set By Firms," Dundee Discussion Papers in Economics 084, Economic Studies, University of Dundee.
- Mazumder, Sandeep, 2014.
"The Price–Marginal Cost Markup And Its Determinants In U.S. Manufacturing,"
Cambridge University Press, vol. 18(04), pages 783-811, June.
- Mazumder, Sandeep, 2009. "The Price-Marginal Cost Markup and its Determinants in U.S. Manufacturing," MPRA Paper 17260, University Library of Munich, Germany.
- Perron, Pierre & Rodriguez, Gabriel, 2003.
"GLS detrending, efficient unit root tests and structural change,"
Journal of Econometrics,
Elsevier, vol. 115(1), pages 1-27, July.
- Tom Doan, "undated". "PERRONRODRIGUEZ: RATS procedure to perform Perron-Rodriguez unit root test allowing for break at unknown date," Statistical Software Components RTS00156, Boston College Department of Economics.
- Tom Doan, "undated". "GLSDETREND: RATS procedure to perform local to unity GLS detrending," Statistical Software Components RTS00077, Boston College Department of Economics.
- PERRON, Pierre & RODRIGUEZ, Gabriel, 1998. "GLS Detrending, Efficient Unit Root Tests and Structural Change," Cahiers de recherche 9809, Universite de Montreal, Departement de sciences economiques.
- Banerjee, Anindya & Russell, Bill, 2005.
"Inflation and measures of the markup,"
Journal of Macroeconomics,
Elsevier, vol. 27(2), pages 289-306, June.
- Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538-538.
- Domowitz, Ian & Hubbard, R Glenn & Petersen, Bruce C, 1988.
"Market Structure and Cyclical Fluctuations in U.S. Manufacturing,"
The Review of Economics and Statistics,
MIT Press, vol. 70(1), pages 55-66, February.
- Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Market Structure and Cyclical Fluctuations in U.S. Manufacturing," NBER Working Papers 2115, National Bureau of Economic Research, Inc.
- Bils, Mark, 1987. "The Cyclical Behavior of Marginal Cost and Price," American Economic Review, American Economic Association, vol. 77(5), pages 838-855, December.
- Stock, James H, 1987. "Asymptotic Properties of Least Squares Estimators of Cointegrating Vectors," Econometrica, Econometric Society, vol. 55(5), pages 1035-1056, September.
- Yu-Fu CHEN & Bill RUSSELL, 2002. "An Optimising Model of Price Adjustment with Missing Information," Economics Working Papers ECO2002/03, European University Institute.
- Mazumder, Sandeep, 2010.
"The new Keynesian Phillips curve and the cyclicality of marginal cost,"
Journal of Macroeconomics,
Elsevier, vol. 32(3), pages 747-765, September.
- Sandeep Mazumder, 2008. "The New Keynesian Phillips Curve and the Cyclicality of Marginal Cost," Economics Working Paper Archive 545, The Johns Hopkins University,Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-10-00523. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.