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Faculty of Economics


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

Bottom-up Markup Fluctuations


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

Author links: Vasco Carvalho  


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