Demand, Supply And Markup Fluctuations
Bibliographic Data
| ID | 9714317 |
|---|---|
| Authors | Carlos Daniel Santos (0000-0002-8726-7458, Universidade Nova de Lisboa, corresponding author), Luís F Costa (0000-0001-5842-9975, REM—Research in Economics and Mathematics, UECE—Research Unit on Complexity and Economics, Portugal), Paulo Brito (0009-0004-7388-5468, University of Lisbon), Paulo B Brito (REM—Research in Economics and Mathematics, UECE—Research Unit on Complexity and Economics, Portugal) |
| Year | 2022 |
| Volume | 132 |
| Issue | 644 |
| Pages | 1620-1645 |
| Publication date | 2022-05-09 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ej/ueab090 |
| OpenAlex | W4206459144 |
| Language | EN |
| References cited | 38 |
Markup cyclicality has been central for debating policy effectiveness and understanding business cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of firm-level markups and separating supply from demand shocks. We construct a novel dataset with detailed (multi-) product-level prices for individual firms. By estimating a structural model of supply and demand, we evaluate how companies adjust prices and marginal costs as a response to shocks. We find that price markups respond positively to supply shocks and negatively to demand shocks. The mechanism explaining the observed markup behaviour is the same for both shocks: incomplete pass-through of changes along the marginal cost curve to price adjustments. These observed price and output responses are consistent with dynamic demand considerations. Finally, we use our estimated shocks to show how aggregate markup fluctuations in the sample period are mostly explained by aggregate demand shocks
Aggregate demand · Aggregate supply · Business cycle · Construct (python library · Demand shock · Econometrics · Economics · Macroeconomics · Marginal cost · Markup language · Microeconomics · Monetary economics · Monetary policy · Product (mathematics · Supply and demand · Supply shock · Computer Science · Economic theories and models · Market Dynamics and Volatility · Monetary Policy and Economic Impact
Small Menu Costs and Large Business Cycles
Prices, Markups, and Trade Reform
Reallocation, Firm Turnover, and Efficiency
Staggered prices in a utility-maximizing framework
Sticky Information versus Sticky Prices
Estimating Production Functions Using Inputs to Control for Unobservables
The Dynamics of Productivity in the Telecommunications Equipment Industry
Identifying Demand Shocks From Production Data
Markups, Gaps, and the Welfare Costs of Business Fluctuations
Endogenous Entry, Product Variety, and Business Cycles
Reconciling Cyclical Movements in the Marginal Value of Time and the Marginal Product of Labor
On the Identification of Gross Output Production Functions
The Slow Growth of New Plants
Closed and Open Economy Models of Business Cycles with Marked Up and Sticky Prices
By How Much Does GDP Rise If the Government Buys More Output
| Highly cited | No |
|---|