Working Paper Series, Department of Economics, Uppsala University
No 2004:7:
Price and Investment Dynamics: An Empirical Analysis of Plant Level Data
Magnus Lundin, Nils Gottfries ()
and Tomas Lindström
Abstract: Price and investment equations are estimated using a
unique data set for Swedish manufacturing plants. The empirical
specification is based on a theoretical model of a financially constrained
firm selling its output in a customer market. We find that, as predicted by
our theoretical model, prices respond strongly to cost shocks but are not
much affected by variations in demand and high predetermined investment is
associated with a higher price.
Keywords: Cyclical price adjustment; price rigidity; price equation; countercyclical markup; (follow links to similar papers)
JEL-Codes: D43; L11; L13; (follow links to similar papers)
41 pages, June 18, 2004
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- This paper is forthcoming as:
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Lundin, Magnus, Nils Gottfries and Tomas Lindström, 'Price and Investment Dynamics: An Empirical Analysis of Plant Level Data', Journal of Money, Credit, and Banking.
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