Inflation, relative price variability and the markup: evidence from the United States and the United Kingdom
Economic Modelling, 2007, 24, 82-100
BANERJEE, Anindya, MIZEN, Paul, RUSSELL, Bill, Inflation, relative price variability and the markup: evidence from the United States and the United Kingdom, Economic Modelling, 2007, 24, 82-100 - https://hdl.handle.net/1814/8029
Retrieved from Cadmus, EUI Research Repository
This paper links two separate empirical literatures on inflation, relative price variability (RPV) and the price–cost markup. Measures constructed from annual and quarterly data for the US and UK are used to examine the nature of the relationships among these variables. The results show that two long-run relationships can be identified from the data: a negative relationship between inflation and the markup and a positive relationship between inflation and RPV. We eliminate the possibility that inflation is a proxy for RPV in the inflation–markup relationship and show systems estimates to be superior to single-equation estimates.
Cadmus permanent link: https://hdl.handle.net/1814/8029
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