Discussion paper

DP15360 Bottom-up Markup Fluctuations

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.


Burstein, A, V Carvalho and B Grassi (2020), ‘DP15360 Bottom-up Markup Fluctuations‘, CEPR Discussion Paper No. 15360. CEPR Press, Paris & London. https://cepr.org/publications/dp15360