Markup cyclicality and input factor adjustments
Journal article, Peer reviewed
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Original versionEmpirical Economics 2010, 38(2):409-428 10.1007/s00181-009-0273-y
This paper investigates the existence of markups and their cyclical behaviour at the industry sector level. Markups are given as a price-cost relation that is estimated from a dynamic, structural model of the firm. The firms face costly adjustment of labour and potential financial constraints. The model is tested on a panel of firm- and plant-level data from Norwegian manufacturing industries. The results indicate a frequent presence of moderate pro-cyclical markups. Labour adjustment costs are present in four out of seven sectors but small in magnitude. The results are related to the role played by unions in a setting with high union density.
-This is the author's version of the article:"Markup cyclicality and input factor adjustments",Empirical Economics, April 2010, Volume 38, Issue 2, pp 409-428.