Abstract
This paper investigates the relationship between firm mark-ups and inflation. In sectors of the economy with industries characterized by flexible prices and sticky wages, mark-ups should respond positively to inflation. Industry mark-ups in sectors with both flexible prices and flexible wages theoretically may rise or fall in response to an increase in the price level. Mark-ups of industries in sectors of the economy in which prices are sticky should respond negatively to inflation, with an absolutely larger negative response occurring in sticky-price industries with flexible wages. Empirical analysis of US industries provides support for nearly all of these theoretical predictions.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
