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Discussion Paper Details

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Title: Bottom-up Markup Fluctuations

Author(s): Ariel Tomas Burstein, Vasco M Carvalho and Basile Grassi

Publication Date: October 2020

Keyword(s): Aggregate fluctuations, Firm Dynamics, granularity, Markup Cyclicality and Oligopolistic Competition

Programme Area(s): Industrial Organization and Monetary Economics and Fluctuations

Abstract: We study markup cyclicality in a granular macroeconomic model with oligopolistic competition. We characterize the comovement of firm, sectoral, and economy-wide markups with sectoral and aggregate output following firm-level shocks. We then quantify the model's ability to reproduce salient features of the cyclical properties of markups in French administrative firm-level data, from the bottom (firm) level to the aggregate level. Our model helps rationalize various, seemingly conflicting, measures of markup cyclicality in the French data.

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Bibliographic Reference

Burstein, A, Carvalho, V and Grassi, B. 2020. 'Bottom-up Markup Fluctuations'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15360