Sector-specific Markup Fluctuations and the Business Cycle

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Show simple item record GABLER, Alain 2007-10-22T16:10:30Z 2007-10-22T16:10:30Z 2007
dc.identifier.issn 1725-6704
dc.description.abstract The counter-cyclicality in the relative price of equipment investment which is observed in the U.S. has been attributed to equipment-specific pro- ductivity shocks. Cross-country evidence indicates that a number of coun- tries experience sizeable delays between a surge in equipment production and a fall in its relative price, which is dfficult to reconcile with sector- specific shocks. I show that in the presence of sector specific, time-varying markups, relative price movements arise as a direct consequence of con- sumption smoothing, even if all shocks are aggregate, while barriers to firm entry lead to delays in relative price responses. A calibrated version of the model explains around one-third of the relative price fluctuations which are observed in the U.S., as well as the qualitative differences in the behaviour of this relative price across countries. en
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher European University Institute
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2007/25 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject E25 en
dc.subject E32 en
dc.subject D43 en
dc.subject Endogenous markups en
dc.subject Firm entry and exit en
dc.subject relative prices en
dc.title Sector-specific Markup Fluctuations and the Business Cycle en
dc.type Working Paper en
dc.neeo.contributor GABLER|Alain|aut|
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