Market power and fiscal policy in OECD countries

Antonio Afonso and Luis Costa

No 1173, Working Paper Series from European Central Bank

Abstract: We compute average mark-ups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions the results, with annual data for a set of 14 OECD countries covering the period 1970-2007, show that the mark-up (i) depicts a pro-cyclical behaviour with productivity shocks and (ii) a mildly counter-cyclical behaviour with fiscal spending shocks. We also use a Panel Vector Auto-Regression analysis, increasing the efficiency in the estimations, which confirms the countryspecific results. JEL Classification: D4, E0, E3, H6

Keywords: fiscal policy; mark-up; panel VAR; VAR (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cba and nep-mac
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Market power and fiscal policy in OECD countries (2013)
Working Paper: Market Power and Fiscal Policy in OECD Countries (2010)
Working Paper: Market Power and Fiscal Policy in OECD Countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101173

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