The Long-Run Relationship Between Inflation and the Markup in the U.S

Sandeep Mazumder

Economics Bulletin, 2011, vol. 31, issue 1, 473-484

Abstract: This paper examines the long-run relationship between inflation and a new measure of the price-marginal cost markup. This new markup index is derived while accounting for labor adjustment costs, which a large number of the papers that estimate the markup have ignored. We then examine the long-run relationship between this markup measure, which is estimated using U.S. manufacturing data, and inflation. We find that decreases in the markup that are associated with a percentage point increase in inflation are much smaller than previous studies have found.

Keywords: Markup; Inflation; Marginal Cost. (search for similar items in EconPapers)
JEL-codes: D4 E3 (search for similar items in EconPapers)
Date: 2011-01-30
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Citations: View citations in EconPapers (3)

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