Margin rate and the cycle: the role of trade openness

Gilbert Cette, Rémy Lecat and A. Ould Ahmed Jiddou

Working papers from Banque de France

Abstract: Using three datasets of French manufacturing firms, this paper 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)
JEL-codes: D24 D43 E32 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2016
New Economics Papers: this item is included in nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
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:bfr:banfra:581

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