Bottom-Up Markup Fluctuations

Burstein, Ariel T.; Carvalho, Vasco M.; Grassi, Basile

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Bottom-Up Markup Fluctuations

NBER Working Paper No. w27958

66 Pages Posted: 19 Oct 2020 Last revised: 24 May 2023

See all articles by Ariel T. Burstein

Ariel T. Burstein

University of California, Los Angeles (UCLA) - Department of Economics

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI; Centre for Economic Policy Research (CEPR); University of Cambridge

Basile Grassi

Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Centre for Economic Policy Research (CEPR)

There are 2 versions of this paper

Date Written: October 2020

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.

Suggested Citation: Suggested Citation

Burstein, Ariel T. and Carvalho, Vasco M. and Grassi, Basile, Bottom-Up Markup Fluctuations (October 2020). NBER Working Paper No. w27958, Available at SSRN: https://ssrn.com/abstract=3714450