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Pricing and Product Market Structure in Open Economies: An Empirical Test

Author

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  • Alogoskoufis, George
  • Martin, Christopher
  • Pittis, Nikitas

Abstract

This paper investigates whether the structure of product markets in the industrial economies conforms to the assumptions of the two main benchmark models of international macroeconomics, namely the one-sector imperfect-substitutes model, and the two-sector model with non-traded goods. Our proposed test rests on the estimation of price equations and also allows the estimation of the degree of price sluggishness. Our findings, for 20 OECD economies, suggest that the one sector model is rejected in favour of a generalized model with two types of internationally traded goods. They also suggest significant sluggishness in the adjustment of prices.

Suggested Citation

  • Alogoskoufis, George & Martin, Christopher & Pittis, Nikitas, 1990. "Pricing and Product Market Structure in Open Economies: An Empirical Test," CEPR Discussion Papers 486, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:486
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    Citations

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    Cited by:

    1. Smith, Peter N., 2000. "Output price determination and the business cycle," Economic Modelling, Elsevier, vol. 17(1), pages 49-69, January.
    2. Colin Ellis, 2006. "Elasticities, markups and technical progress: evidence from a state-space approach," Bank of England working papers 300, Bank of England.
    3. Palaskas, Theodosios B. & Varangis, Panos N., 1991. "Is there excess co-movement of primary commodity prices? A co-integration test," Policy Research Working Paper Series 758, The World Bank.
    4. Torben Andersen & Niels Hansen, 1995. "Price adjustment in open economies," Open Economies Review, Springer, vol. 6(4), pages 303-321, October.
    5. Colin Ellis & Simon Price, 2003. "The impact of price competitiveness on UK producer price behaviour," Bank of England working papers 178, Bank of England.

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