IDEAS home Printed from https://ideas.repec.org/p/col/000094/003369.html
   My bibliography  Save this paper

Price Setting In The Argentine And Colombian Manufacturing Industry

Author

Listed:
  • Juan Carlos Echeverry

Abstract

A price-setting mechanism based on a markup over variable costs is studied for the quite different inflationary experiences of Argentina and Colombia. The paper pursues a twofold strategy: first, it test the null hypothesis of a constant markup against the alternative of a variable one; second, it checks the sensitivity of the price setting mechanism to strong shifts in the macroeconomic environment. The model explains price setting during periods of moderate and high inflation in both countries. However, it is less powerful for the period of price stability in Argentina. Finally, markups seem to be constant for all types of inflationary experiences except hyperinflation. This stands in contrast to a body of literature that has found a negative relationship between markups and inflation for OECD countries. The estimations shed light on other interesting issues: productivity has become a crucial determinant of prices for Argentinian manufacturing firms during the period of stability and opening of the economy; in contrast, the results suggest a weak impact of the opening on Colombia firms.

Suggested Citation

  • Juan Carlos Echeverry, 1998. "Price Setting In The Argentine And Colombian Manufacturing Industry," Borradores de Economia 3369, Banco de la Republica.
    • Handle: RePEc:col:000094:003369
    as

    Download full text from publisher

    File URL: http://www.banrep.gov.co/docum/ftp/borra090.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tommasi, Mariano, 1994. "The Consequences of Price Instability on Search Markets: Toward Understanding the Effects of Inflation," American Economic Review, American Economic Association, vol. 84(5), pages 1385-1396, December.
    2. 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.
    3. Mariano Tommasi, 1993. "The Consequences of Price Instability on Search Markets," UCLA Economics Working Papers 700, UCLA Department of Economics.
    4. 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.
    5. Kaskarelis, Ioannis A, 1993. "Inflation and the Mark-Up in UK Manufacturing Industry," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(4), pages 391-407, November.
    6. Roland Bénabou & Robert Gertner, 1993. "Search with Learning from Prices: Does Increased Inflationary Uncertainty Lead to Higher Markups?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(1), pages 69-93.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:spo:wpmain:info:hdl:2441/eu4vqp9ompqllr09hc03295hg is not listed on IDEAS
    2. Borota Milicevic, Teodora & Carlsson, Mikael, 2016. "Markups from Inventory Data and Export Intensity," Working Paper Series 2016:9, Uppsala University, Department of Economics.
    3. John Rand, 2017. "Comparing estimated and self-reported markups for formal and informal firms in an emerging market context," WIDER Working Paper Series 160, World Institute for Development Economic Research (UNU-WIDER).
    4. Cecília Hornok & Balázs Muraközy, 2019. "Markups of Exporters and Importers: Evidence from Hungary," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(3), pages 1303-1333, July.
    5. Flora Bellone & Patrick Musso & Lionel Nesta & Frederic Warzynski, 2016. "International trade and firm-level markups when location and quality matter," Journal of Economic Geography, Oxford University Press, vol. 16(1), pages 67-91.
    6. Békés, Gábor & Hornok, Cecília & Muraközy, Balázs, 2016. "Globalization and the markups of European firms," Kiel Working Papers 2044, Kiel Institute for the World Economy (IfW Kiel).
    7. Kosuke Aoki & Yoshihiko Hogen & Kosuke Takatomi, 2023. "Price Markups and Wage Setting Behavior of Japanese Firms," Bank of Japan Working Paper Series 23-E-5, Bank of Japan.
    8. Axel Demenet & Quynh Hoang, 2018. "How important are management practices for the productivity of small and medium enterprises?," WIDER Working Paper Series 69, World Institute for Development Economic Research (UNU-WIDER).
    9. Andrea Vaona, 2016. "A nonparametric panel data approach to the cyclical dynamics of price-cost margins in the fourth Kondratieff wave," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 155-170, August.
    10. Sandeep Mazumder, 2011. "The Long-Run Relationship Between Inflation and the Markup in the U.S," Economics Bulletin, AccessEcon, vol. 31(1), pages 473-484.
    11. Siotis, Georges, 2003. "Competitive pressure and economic integration: an illustration for Spain, 1983-1996," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1435-1459, December.
    12. Chen Yeh & Claudia Macaluso & Brad Hershbein, 2022. "Monopsony in the US Labor Market," American Economic Review, American Economic Association, vol. 112(7), pages 2099-2138, July.
    13. Beccarello, Massimo, 1997. "Time series analysis of market power: Evidence from G-7 manufacturing," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 123-136, February.
    14. Sascha A. Weber & Sven M. Anders, 2007. "Price rigidity and market power in German retailing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 737-749.
    15. Amoroso, S., 2013. "Heterogeneity of innovative, collaborative, and productive firm-level processes," Other publications TiSEM f5784a49-7053-401d-855d-1, Tilburg University, School of Economics and Management.
    16. Haibin Wu, 2009. "Entry barriers and markup ratios: evidence from OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(2), pages 125-130.
    17. Frederic Warzynski & Jan De Loecker, 2010. "Markups and Firm-level Exports," 2010 Meeting Papers 438, Society for Economic Dynamics.
    18. Jaimovich, Nir, 2007. "Firm dynamics and markup variations: Implications for sunspot equilibria and endogenous economic fluctuations," Journal of Economic Theory, Elsevier, vol. 137(1), pages 300-325, November.
    19. Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August.
    20. Jan De Loecker & Frederic Warzynski, 2012. "Markups and Firm-Level Export Status," American Economic Review, American Economic Association, vol. 102(6), pages 2437-2471, October.
    21. Bottasso, Anna & Sembenelli, Alessandro, 2001. "Market power, productivity and the EU Single Market Program: Evidence from a panel of Italian firms," European Economic Review, Elsevier, vol. 45(1), pages 167-186, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:col:000094:003369. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Clorith Angelica Bahos Olivera (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.