The Cyclical Behavior of Prices
Author | : Geoffrey Hoyt Moore |
Publisher | : |
Total Pages | : 50 |
Release | : 1971 |
Genre | : Price indexes |
ISBN | : |
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Author | : Geoffrey Hoyt Moore |
Publisher | : |
Total Pages | : 50 |
Release | : 1971 |
Genre | : Price indexes |
ISBN | : |
Author | : Thomas F. Cooley |
Publisher | : |
Total Pages | : 24 |
Release | : 1989 |
Genre | : |
ISBN | : |
Author | : Geoffrey Hoyt Moore |
Publisher | : |
Total Pages | : 48 |
Release | : 1971 |
Genre | : |
ISBN | : |
Author | : John P. Judd |
Publisher | : |
Total Pages | : 20 |
Release | : 1993 |
Genre | : |
ISBN | : |
Author | : Julio Rotemberg |
Publisher | : |
Total Pages | : 128 |
Release | : 1999 |
Genre | : Business cycles |
ISBN | : |
Because inputs are scarce, marginal cost should be an increasing function of output. Without changes in this real marginal cost schedule, aggregate output can vary if and only if the markup of price over marginal cost varies. In this review, we discuss the extent to which observed fluctuations in aggregate economic activity depend upon such variations in average markups. We first study whether, empirically, real marginal cost rises in cyclical expansions. Average real labor cost is not very procyclical, but, for reasons such as overhead labor and adjustment costs, marginal labor cost should be more procyclical. Measures of marginal cost based on materials costs and inventories also appear procyclical. We next show that countercyclical markup variation may, depending upon how costs are modeled, account for a substantial fraction of cyclical output movements. We also show that the observed procyclical variations in productivity and profits are consistent with the hypothesis that cyclical variations in output are primarily due to markup variations than to shifts in the real marginal cost schedule. Finally, we survey theories of endogenous markup variation. These include both models of sticky and models in which firms' desired markup varies over time.
Author | : Mark Joseph Bils |
Publisher | : |
Total Pages | : 278 |
Release | : 1985 |
Genre | : |
ISBN | : |
Author | : Eric P. Bettinger |
Publisher | : |
Total Pages | : |
Release | : 1996 |
Genre | : Business cycles |
ISBN | : |
Author | : Mr.Bankim Chadha |
Publisher | : International Monetary Fund |
Total Pages | : 28 |
Release | : 1994-08-01 |
Genre | : Business & Economics |
ISBN | : 1451851472 |
This paper re-examines the cyclical behavior of prices using postwar quarterly data for the G-7. We confirm recent evidence that the price level is countercyclical. However, we find strong evidence that the inflation rate is procyclical in our sample. Our results show the importance of making a clear distinction between inflation and the cyclical component of the price level when reporting and interpreting stylized facts regarding business cycles.
Author | : Thomas Hale Pendleton |
Publisher | : |
Total Pages | : 178 |
Release | : 1960 |
Genre | : |
ISBN | : |
Author | : Julio Rotemberg |
Publisher | : |
Total Pages | : 107 |
Release | : 1998 |
Genre | : |
ISBN | : |
Because inputs are scarce, marginal cost is an increasing function of output. Diminishing returns, costs of increasing employment as well as the increasing marginal disutility of working when hours worked and effort rise all contribute to make this function steep. Without changes in this function relating marginal cost to output, aggregate output can vary if and only if the markup of price to marginal cost (the inverse of real marginal cost for typical firms) varies. We first study whether, empirically, real marginal cost does rise in cyclical expansions. Average real labor cost is not very pro-cyclical but, for several reasons, marginal labor cost is more procyclical than average labor cost. These include the presence of overhead labor and adjustment costs as well as differences between the marginal and average wage. These corrections results in procyclical measures of real marginal cost. Measures of marginal costs based on materials costs and inventories also appear procyclical. We show that these procyclical movements in marginal cost may, depending on how costs are modeled, account for a substantial fraction of cyclical output movements. Finally, we survey models of variable markups. These include both models of sticky prices (in which markups vary because firms cannot all costlessly charge the markup they desire) and models in which firms' desired markup varies over time. This set of models allows a rich set of variables to affect output even if these variables do not shift the marginal cost schedule.