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Luís F. Costa
- 21 April 2010
- WORKING PAPER SERIES - No. 1173Details
- Abstract
- We compute average mark-ups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions the results, with annual data for a set of 14 OECD countries covering the period 1970-2007, show that the mark-up (i) depicts a pro-cyclical behaviour with productivity shocks and (ii) a mildly counter-cyclical behaviour with fiscal spending shocks. We also use a Panel Vector Auto-Regression analysis, increasing the efficiency in the estimations, which confirms the countryspecific results.
- JEL Code
- D4 : Microeconomics→Market Structure and Pricing
E0 : Macroeconomics and Monetary Economics→General
E3 : Macroeconomics and Monetary Economics→Prices, Business Fluctuations, and Cycles
H6 : Public Economics→National Budget, Deficit, and Debt