The Cyclicality of Mark-Ups and Profit Margins for the United Kingdom: Some New Evidence
Bank of England - Monetary Assessment and Strategy Division
Bank of England
Reserve Bank of New Zealand
August 1, 2008
Bank of England Working Paper No. 351
In this paper, we assess the cyclicality of mark-ups and profit margins within the United Kingdom, at both the aggregate and industry level. We find that the private sector labour share moves countercyclically, suggesting that the aggregate mark-up moves procyclically. This result survives when we consider more sophisticated measures of the mark-up. And this result is also supported by industry-level data. We find that the aggregate market sector profit share moves procyclically and that the cyclical behaviour of profit margins is largely homogenous across industries. Nevertheless, there is some evidence that margins moved against the cycle in the late 1990s, starting to fall in 1997, whereas GDP growth did not peak until 2000. In tandem with these cyclical movements, we also find that the market sector profit share has trended upwards since 1970, in contrast to the aggregate mark-up, which fell over the same period.
Number of Pages in PDF File: 44
Keywords: Mark-ups, profit margins
JEL Classification: E31, L11working papers series
Date posted: October 8, 2008
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.375 seconds