DP15360 Bottom-up Markup Fluctuations
|Author(s):||Ariel Tomas Burstein, Vasco M Carvalho, Basile Grassi|
|Publication Date:||October 2020|
|Keyword(s):||Aggregate fluctuations, Firm Dynamics, granularity, Markup Cyclicality, Oligopolistic Competition|
|JEL(s):||D21, D22, D24, D43, E32, L11, L13|
|Programme Areas:||Industrial Organization, Monetary Economics and Fluctuations|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15360|
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.