Bottom-Up Markup Fluctuations
68 Pages Posted: 3 Nov 2020
Date Written: October 2020
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.
Keywords: Aggregate fluctuations, Firm Dynamics, granularity, Markup Cyclicality, Oligopolistic Competition
JEL Classification: D21, D22, D24, D43, E32, L11, L13
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