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Imperfect competition, government spending and estimated markup

  • Ali Abcha

This paper is an empirical study that aims at explaining economic fluctuations and behavior mark-up. Inspired by the method of Roeger (1995), we perform a study of four OECD countries (Denmark, Finland, Italy and the United States) for 17 manufacturing industries covering the period 1986-2008. This study provides a comparison between our estimates of mark-up and other observations on mark-up pricing (Oliveira, Scarpetta and Pilat (1996), Roger (1995) and Rotemberg and Woodford (1992)). It also provides an interpretation of the estimated markups that depend on the type of market structure. An application of a VAR model is used to examine the relationship between imperfect competition and the effects fiscal policy on output and mark-up, based on the method of Rotemberg and Woodford (1999).

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File URL: http://economix.fr/pdf/dt/2014/WP_EcoX_2014-11.pdf
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Paper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2014-11.

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Length: 31 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:drm:wpaper:2014-11
Contact details of provider: Postal: 200 Avenue de la République, Bât. G - 92001 Nanterre Cedex
Web page: http://economix.fr
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  1. Silvestre, Joaquim, 1993. "The Market-Power Foundations of Macroeconomic Policy," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 105-41, March.
  2. Marvin Goodfriend & Robert G. King, 1998. "The new neoclassical synthesis and the role of monetary policy," Working Paper 98-05, Federal Reserve Bank of Richmond.
  3. Luis F. COSTA & Antonio AFONSO, . "Market Power and Fiscal Policy in OECD Countries," EcoMod2010 259600041, EcoMod.
  4. António Afonso & Davide Furceri, 2008. "Government Size, Composition, Volatility and Economic Growth," Working Papers Department of Economics 2008/04, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
  5. Gali, Jordi, 1994. "Monopolistic competition, endogenous markups, and growth," European Economic Review, Elsevier, vol. 38(3-4), pages 748-756, April.
  6. Caballero, R.J. & Lyons, R.K., 1989. "The Role Of External Economies In U.S. Manufacturing," Discussion Papers 1989_14, Columbia University, Department of Economics.
  7. Thomas SEEGMULLER, 2004. "Concurrence imparfaite, variabilité du taux de marge et fluctuations endogènes," Discussion Papers (REL - Recherches Economiques de Louvain) 2003042, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  8. Bils, Mark, 1987. "The Cyclical Behavior of Marginal Cost and Price," American Economic Review, American Economic Association, vol. 77(5), pages 838-55, December.
  9. 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 921-47, October.
  10. Judd, Kenneth L., 1999. "Optimal taxation and spending in general competitive growth models," Journal of Public Economics, Elsevier, vol. 71(1), pages 1-26, January.
  11. Guo, Jang-Ting & Lansing, Kevin J., 1999. "Optimal taxation of capital income with imperfectly competitive product markets," Journal of Economic Dynamics and Control, Elsevier, vol. 23(7), pages 967-995, June.
  12. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
  13. Yangru Wu & Junxi Zhang, 2003. "Uniqueness and Stability of Equilibria in a Model with Endogenous Markups and Labor Supply," Annals of Economics and Finance, Society for AEF, vol. 4(1), pages 177-191, May.
  14. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-66, September.
  15. Joaquim Oliveira Martins & Stefano Scarpetta, 2002. "Estimation of the Cyclical Behaviour of Mark-ups: A Technical Note," OECD Economic Studies, OECD Publishing, vol. 2002(1), pages 173-188.
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