Market Power and Fiscal Policy in OECD Countries

Antonio Afonso and Luis Costa

No 2010/11, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: We compute average mark-ups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions the results, with annual data for a set of 14 OECD countries covering the period 1970-2007, show that the mark-up (i) depicts a pro-cyclical behaviour with productivity shocks and (ii) a mostly counter-cyclical behaviour with fiscal spending shocks. We also use a Panel Vector Auto-Regression analysis, increasing the efficiency in the estimations, which confirms the country-specific results.

Keywords: Fiscal Policy; Mark-up; VAR; Panel VAR. (search for similar items in EconPapers)
JEL-codes: D4 E3 E6 H6 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-cba
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Market power and fiscal policy in OECD countries (2013)
Working Paper: Market power and fiscal policy in OECD countries (2010)
Working Paper: Market Power and Fiscal Policy in OECD Countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp112010

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