Markup Cyclicality and Input Factor Adjustments

Posted: 12 Feb 2010 Last revised: 18 Feb 2010

See all articles by Jan Erik Askildsen

Jan Erik Askildsen

University of Bergen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Øivind Anti Nilsen

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: April 30, 2008

Abstract

This paper investigates the existence of markups and their cyclical behaviour at industry sector level. Markups are given as a price-cost relation that is estimated from a dynamic, structural model of the firm. The firms face costly adjustment of labour and potential financial constraints. The model is tested on a panel of firm- and plant-level data from Norwegian manufacturing industries. The results indicate a frequent presence of pro-cyclical markups. Labour adjustment costs are small and negligible. The results are related to the role played by unions in a setting with high union density.

Suggested Citation

Askildsen, Jan Erik and Nilsen, Oivind Anti, Markup Cyclicality and Input Factor Adjustments (April 30, 2008). NHH Dept. of Economics Discussion Paper No. 10/2008, Empirical Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1551998

Jan Erik Askildsen

University of Bergen - Department of Economics ( email )

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Norway
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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

Oivind Anti Nilsen (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

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Norway

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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