Margin rate and the cycle: the role of trade openness

Gilbert Cette, Rémy Lecat and Ahmed Ould Ahmed Jiddou
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Ahmed Ould Ahmed Jiddou: Centre de recherche de la Banque de France - Banque de France

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Abstract: Using three datasets of French manufacturing firms, this article studies the role of trade openness, in relation with the cycle, as a determinant of company margin rate. Margin rates increase as capacity utilization tightens (and vice versa), reflecting the procyclicality of margin rates. However, high import rates are limiting this procyclicality: when capacities are tight, domestic producers may not be able to serve demand, but foreign producers may substitute for them if they are already present on the market as reflected by the level of import rates.

Keywords: Margin rates; capacity utilization; cycle; trade openness (search for similar items in EconPapers)
Date: 2016-02-04
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Published in Applied Economics, 2016, 48 (37), pp.3569-3575. ⟨10.1080/00036846.2016.1142655⟩

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Journal Article: Margin rate and the cycle: the role of trade openness (2016)
Working Paper: Margin rate and the cycle: the role of trade openness (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03563434

DOI: 10.1080/00036846.2016.1142655

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