Markup Cyclicality: Evidence From Belgian Manufacturing Firms

Asmae El Gallaa

No 627690, Working Papers of VIVES - Research Centre for Regional Economics from KU Leuven, Faculty of Economics and Business (FEB), VIVES - Research Centre for Regional Economics

Abstract: Countercyclical markup is a leading hypothesis in representative agent models of macroeconomic fluctuations; however, substantial heterogeneity across firms is documented at the micro-level. I test this hypothesis using an extensive firm-level data on Belgian manufacturing firms covering the period 1996-2014. I measure a firm’s markup as the wedge between its output elasticity of material inputs and their share in revenues. Consistent with recent studies challenging the findings of countercyclical markups I find that, on average, firmlevel markups appear to be procyclical. However, firms’ markups appear to be procyclical or acyclical depending on their size, age, end-use of products, and technological intensity.

Keywords: countercyclical markups; business cycles; production function estimation; materials share (search for similar items in EconPapers)
Pages: 53
Date: 2018-08-01
New Economics Papers: this item is included in nep-bec, nep-eff and nep-mac
Note: paper number 2018.70
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Forthcoming in FEB Research Report VIVES 2018.70

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Persistent link: https://EconPapers.repec.org/RePEc:ete:vivwps:627690

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