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The Levels and Cyclical Behaviour of Mark-ups Across Countries and Market Structures

Listed author(s):
  • Joaquim Oliveira Martins
  • Stefano Scarpetta

In this paper, we present estimates of the mark-up of product price over marginal costs for the US manufacturing industries over the 1970-1992 period. The paper extends the analysis used in previous studies based on nominal productivity residuals by considering intermediate inputs and cyclical fluctuations of price margins. The estimated steady-state mark-ups are positive but moderate, generally in the range of 10-20 per cent. The results also support the hypothesis of countercyclical price margins in most manufacturing industries, especially in the presence of downward rigidities of labour inputs. This offers an appealing interpretation of the otherwise puzzling procyclicality of real wages and enables to better estimate TFP. We also discuss the role of market structures on the levels and cyclicality of mark-ups. Finally, we compare the results for the United States with those of the other G-5 countries and distinguish between fragmented and segmented industries. The latter ... Cette étude présente des estimations du taux de marge des prix sur les coûts marginaux pour les industries manufacturières sur la période 1970-92. On élargit ici l’analyse utilisée dans des études précédentes, fondées sur l’utilisation des résidus nominaux de productivité, en tenant compte des biens intermédiaires et les fluctuations cycliques des taux de marge. Les taux de marge estimés sont positifs mais modérés, entre 10 et 20 pour cent. Les résultats confortent l’hypothèse que le taux de marge sont contre-cycliques dans la plupart des industries, notamment en présence de rigidités à la baisse de l’emploi. Ceci offre une interprétation intéressante pour le puzzle bien connu de la pro-cyclicalité des salaires réels et permet d’améliorer l’estimation de la productivité totale des facteurs. En dernier, nous comparons les résultats obtenus pour les États-Unis avec ceux des autres pays du G-5 et introduisons la distinction entre industries fragmentées et segmentées. Cette comparaison ...

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 213.

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Date of creation: 30 Apr 1999
Handle: RePEc:oec:ecoaaa:213-en
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