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Faculty of Economics

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Burstein, A., Carvalho, V. M. and Grassi, B.

Bottom-up Markup Fluctuations

CWPE2096

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: Markup Cyclicality, Oligopolistic Competition, Firm Dynamics, Granularity, Aggregate Fluctuations

Author links: Vasco Carvalho  

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2096.pdf

Open Access Link: https://doi.org/10.17863/CAM.62308