Monopolistic Competition in Switzerland and Mark-up Pricing Over the Business Cycle

Christian Mueller

No 04-86, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: We investigate how firms' market power affects the price level. In our small macromodel we show, that firms - in addition to hypothesised structural mark-up pricing power - may take advantage of favourable business cycle fluctuations. The paper provides empirical evidence for both these propositions to hold. To show this, we estimate the model in a multivariate time series framework with double integrated variables. We can derive a model based business cycle indicator which compares very well with exogenous survey data information.

Keywords: Mark-up pricing; Monopolistic competition; Business cycle indicators; I(2) cointegration; Multivariate time series analysis (search for similar items in EconPapers)
Pages: 12 pages
Date: 2004-04
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:04-86

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