Research Discussion Papers, Bank of Finland
No 16/1997:
Time-Varying Markups: Empirical Analysis of Markups in Finnish Industries
Pentti Forsman ()
, Tuomas Saarenheimo ()
and Marko Terviö
Abstract: In this study, we analyse variation of markups in Finnish
industrial sectors, both between industries and over time. The study finds
evidence that: - Since the beginning the 1980s, practically every Finnish
industrial sector has been able to extract a positive markup. - The average
industrial markup has apparently declined over time. In addition to the
declining trend, there seems to be procyclical movement in markups. -
Despite of the decline in average markups, most industries maintained
positive markups in 1995. The same reservations apply to these results as
to corresponding macro-level analysis of markups, because the model relies
on instantaneous adjustment of the factors of production. If, for any
reason, firms are slow to adjust their factors to changes in demand
conditions, it would bias our markup estimates upwards. Indeed, we believe
this is the case, so we do not recommend giving too much weight to the
level of our markup estimates. Rather, we wish to note that the estimated
time path for industrial markups is generally plausible. Thus, the decline
in markups since 1991 may partly explain Finland's unexpectedly low
inflation in recent years.
Keywords: markup; imperfect competition; (follow links to similar papers)
28 pages, October 22, 1997
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
DP_16_1997.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Minna Nyman ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
