We have updated our paper “The Cyclicality of the Price-Cost Markup”. You can download the revised version directly here or on my research page.
We have updated our paper “The Cyclicality of the Price-Cost Markup”. You can download the revised version directly here or on my research page.
Valerie Ramey and I have posted a draft of our new working paper, “The Cyclical Behavior of the Price-Cost Markup.” In it we present considerable evidence that markups are significantly procyclical, contrary to the stylized fact that markups are countercyclical.
Here is the abstract:
Countercyclical markups constitute the key transmission mechanism for monetary and other “demand” shocks in New Keynesian models. This paper tests the foundation of those models by studying the cyclical properties of the markup of price over marginal cost. The first part of the paper studies markups in the aggregate economy and the manufacturing sector. We use Bils’ (1987) insights for converting average cost to marginal cost, but do so with richer data. We find that all measures of markups are either procyclical or acyclical. Moreover, we show that monetary shocks lead markups to fall with output. The second part of the paper merges input-output information on shipments to the government with detailed industry data to study the effect of demand changes on industry-level markups. Industry-level markups are found to be decidedly procyclical in response to demand changes.
You can download a copy of the paper from the link above or on my Research page.
The final exam review session is Tue, Dec 9 from 6:00-7:50p in 113 Center Hall. I plan to spend the first 20-30 minutes finishing the structured review and then spend the rest of the time answering your questions.
I cannot hold office hours on Tuesday this week. Instead, I will have office hours on Thursday (12/4) from 12:00-2:00p in 103 Marshall College. I will also hold extra office hours during exam week.
Remember, Thursday will be an in-class review for the final exam.
I posted a revised version of my paper on the cyclical bias of geographic mobility, “A Longitudinal Analysis of the Current Population Survey: Assessing the Cyclical Bias of Geographic Mobility.” You can download the paper from my research page or directly by clicking on the title. Here is the abstract:
This paper assesses the implications of geographic mobility for the measurement of U.S. labor market dynamics using the Current Population Survey (CPS). Because the CPS does not follow individuals that move, estimates may be biased if the labor market behavior of movers differs systematically from that of nonmovers. I create a new database, the Longitudinal Population Database (LPD), that utilizes all longitudinal information in the CPS to form a panel data set. I use the LPD to identify persons who move and therewith estimate a bound on the bias from geographic mobility. I find that the cyclical bias arising from geographic mobility is small. At business cycle frequencies, the difference between the separation hazard rate calculated from the entire CPS sample and from a subset that are known not to have moved never exceeds 4 percent. There is little effect of mobility on the job finding hazard rate. I conclude that geographic mobility does not significantly affect CPS labor market dynamics.
The syllabus for Economics 101 has been posted on the course web page. You may download it directly here.