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A note on labor share, price markup and monetary policy

Shiou-Yen Chu

Economics Letters, 2020, vol. 192, issue C

Abstract: This paper extends Kaplan and Zoch’s (2020) insight that the total labor share is neither solely nor inversely determined by the price markup in a medium scale dynamic stochastic general equilibrium (DSGE) model with nondurables and durables. Our calibration results show that when monetary policy shocks and markup shocks are set to be positively (negatively) correlated, monetary contraction increases (decreases) total labor share and price markup. The total labor share is countercyclical (procyclical) conditional on a monetary policy shock.

Keywords: Labor share; Monetary policy; DSGE models (search for similar items in EconPapers)
JEL-codes: C23 E32 E52 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:192:y:2020:i:c:s0165176520301300

DOI: 10.1016/j.econlet.2020.109169

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