Markups and the Euro
نویسنده
چکیده
Recent theoretical work indicates that when firms set nominal prices in advance they are exposed to business cycle risk. Risk averse firms with market power may set relatively high markups over marginal cost to offset this risk. An appropriate monetary policy could reduce the risk of pre-set nominal prices. This paper uses industry-level panel data to estimate how the exchange rate regime affects the average markup in developed economies. This paper finds that the adoption of fixed exchange rates in the lead-up to European currency union is significantly associated with declines in labor share of income which is indicative of increased markups.
منابع مشابه
The Proposed Mathematical Models For Decision- Making And Forecasting On Euro- Yen In Foreign Exchange Market
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