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Sector-speci c Markup Fluctuations and the Business Cycle
| Content Provider | Semantic Scholar |
|---|---|
| Author | Gabler, Alain |
| Copyright Year | 2007 |
| Abstract | Abstract The counter-cyclicality in the relative price of equipment investment which is observed in the U.S. has been attributed to equipment-speci c productivity shocks. Cross-country evidence indicates that a number of countries experience sizeable delays between a surge in equipment production and a fall in its relative price, which is di cult to reconcile with sectorspeci c shocks. I show that in the presence of sector speci c, time-varying markups, relative price movements arise as a direct consequence of consumption smoothing, even if all shocks are aggregate, while barriers to rm entry lead to delays in relative price responses. A calibrated version of the model explains around one-third of the relative price uctuations which are observed in the U.S., as well as the qualitative di erences in the behaviour of this relative price across countries. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://ecares.ulb.ac.be/ecaresdocuments/ws/winter/gabler-paper.pdf |
| Alternate Webpage(s) | https://www.mnb.hu/letoltes/gabler.pdf |
| Alternate Webpage(s) | https://www.economicdynamics.org/meetpapers/2008/paper_88.pdf |
| Alternate Webpage(s) | https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=SED2008&paper_id=88 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
