Bottom-Up Markup Fluctuations

68 Pages Posted: 3 Nov 2020

See all articles by Ariel Burstein

Ariel Burstein

affiliation not provided to SSRN

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)

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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.

Keywords: Aggregate fluctuations, Firm Dynamics, granularity, Markup Cyclicality, Oligopolistic Competition

JEL Classification: D21, D22, D24, D43, E32, L11, L13

Suggested Citation

Burstein, Ariel and Carvalho, Vasco M. and Grassi, Basile, Bottom-Up Markup Fluctuations (October 2020). CEPR Discussion Paper No. DP15360, Available at SSRN: https://ssrn.com/abstract=3723549

Ariel Burstein (Contact Author)

affiliation not provided to SSRN

Vasco M. Carvalho

Universitat Pompeu Fabra/CREI ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

HOME PAGE: http://www.crei.cat/people/carvalho/welcome.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Basile Grassi

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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