Market power and fiscal policy in OECD countries
Authors: Afonso; Costa
Source: Applied Economics, Volume 45, Number 32, 1 November 2013 , pp. 4545-4555(11)
Abstract:We compute average markups as a measure of market power throughout time and study their interaction with fiscal policy and macroeconomic variables in a VAR framework. From impulse-response functions, the results, with annual data for a set of 14 OECD countries, show that the markup (i) depicts a pro-cyclical behaviour with productivity shocks and (ii) a counter-cyclical behaviour with fiscal spending shocks. We also use a PVAR, increasing the efficiency in the estimations, which confirms the country-specific results.
Document Type: Research Article
Affiliations: ISEG (School of Economics and Management), Universidade Técnica de Lisboa, Lisboa, Portugal
Publication date: November 1, 2013