An I(2) Analysis of Inflation and the Markup

A. Banerjee, L. Cockerell and B. Russell

Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: An I(2) analysis of Australian inflation and the markup is undertaken within an imperfect competition model. It is found that the levels of prices and costs are best characterised as integrated of order 2 and that the levels cointegrate to the markup which is integrated of order 1. A further cointegrating relationship is found to exist where higher price inflation results in a lower markup in the steady state. The negative correlation between inflation and the markup is interpreted as the cost to firms of overcoming missing information when adjusting prices in an inflationary environment.

Keywords: INFLATION; AUSTRALIA (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
Date: 1998

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:oxf:wpaper:99203

Access Statistics for this paper

More papers in Economics Series Working Papers from University of Oxford, Department of Economics
Contact information at EDIRC.
Series data maintained by Mark George ().