Does Competition Enhancement Have Permanent Inflation Effects?

Cavelaars, Paul

doi:10.1111/1467-6435.00210

Cited by 14 publications

(23 citation statements)

References 11 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…However, more work is needed to come to definitive conclusions about how the effect of product market reform depends upon initial conditions and whether there are synergies in reform. 40 See Neiss (2001) for cross sectional evidence on the relationship between the mark-up and inflation in OECD countries and Cavelaars (2002) for an cross sectional analysis of the effect of product market regulation.…”

Section: Discussionmentioning

confidence: 99%

Product Market Regulation And Macroeconomic Performance : A Review Of Cross-Country Evidence

Schiantarelli¹

2005

Policy Research Working Papers

View full text Add to dashboard Cite

The main purpose of this paper is to provide a critical overview of the recent empirical contributions that use cross-country data to study the effect of product market regulation and reform on a country's macroeconomic performance. After a review of the theoretical literature and of relevant micro-econometric evidence, the paper discusses the main data and methodological issues related to empirical work on this topic. It then critically evaluates the cross-country evidence on the effect of product market regulation on markups, firm dynamics, investment, employment, innovation, productivity and output growth.A summary of what we learn from the econometric results concludes the paper.JEL Classification: D24, K20, L10, L51,O31,O40,O57

show abstract

Section: Discussionmentioning

confidence: 99%

Product Market Regulation And Macroeconomic Performance : A Review Of Cross-Country Evidence

Schiantarelli¹

2005

Policy Research Working Papers

View full text Add to dashboard Cite

show abstract

“…However, this is not a novelty in recent economic theory literature. Following Hall (1988) and Galì (1995), other papers that measure the aggregate markup as a function of the input shares in income in monopolistic competition settings include Neiss (2001), Cavelaars (2003) and Przybyla and Roma (2005). 14 Moreover, Galì and Gertler (1999) have used the labor share as a measure of marginal costs in New Keynesian Phillips curves.…”

Section: The Relationship Between Pmc and Growthmentioning

confidence: 99%

“…14 Galì (1995), Neiss (2001), Cavelaars (2003) and Przybyla and Roma (2005) consider a two-sector framework in which the competitive consumption goods sector employs just differentiated intermediates, and labor is used only by capital goods firms operating in a monopolistically competitive sector. Simply by using the first order conditions for profit maximization of a representative uncompetitive firm, it is shown (see Galì, 1995, p.56;Neiss, 2001, p.574;Cavelaars, 2003, p.87) that the equilibrium markup is equal to the elasticity of output with respect to employment divided by the labor share in income.…”

Section: The Relationship Between Pmc and Growthmentioning

confidence: 99%

Horizontal innovation-based growth and product market competition

Bucci

Parello

2009

Economic Modelling

View full text Add to dashboard Cite

The influence of the degree of competition in the goods market on growth is analyzed by developing an endogenous growth model with horizontal innovation. Product market competition is measured by (1-Lerner index) and depends on both the share of factor inputs in total income and on the elasticity of substitution across goods. We find that the shape of the relationship between competition and growth can change dramatically according to which proxy of competition is used. We interpret our results in terms of the interplay between the resource allocation and the profit incentive effects. HORIZONTAL INNOVATION-BASED GROWTH ANDPRODUCT MARKET COMPETITION † Alberto BUCCI * Carmelo Pierpaolo PARELLO ** Abstract The influence of the degree of competition in the goods market on growth is analyzed by developing an endogenous growth model with horizontal innovation. Product market competition is measured by (1-Lerner index) and depends on both the share of factor inputs in total incomeand on the elasticity of substitution across goods. We find that the shape of the relationship between competition and growth can change dramatically according to which proxy of competition is used. We interpret our results in terms of the interplay between the resource allocation and the profit incentive effects.

show abstract

“…Theoretically, imperfect competition among firms or even a monopoly situation causes output to fall below the optimal level, which might enhance the incentive for monetary authorities to increase money supply in order to inflate (Cavelaars 2003). Furthermore, economic integration is likely to increase the costs of…”

Section: (Iv) Policy Incentives and Reforms Due To Globalisationmentioning

confidence: 99%

“…Duca and VanHoose (2000) show that increased goods market competition lowered inflation, flattened the slope of the Phillips curve and even slightly lowered the NAIRU. Cavelaars (2003) also shows that a higher degree of product market competition leads to a permanently lower inflation rate. Both product market institutions and actual competitive behaviour by firms are important in explaining inflation differentials across OECD countries.…”

mentioning

confidence: 91%

Globalisation and Inflation in OECD Countries

Pehnelt¹

2007

SSRN Journal

View full text Add to dashboard Cite

During the last two decades, the world has experienced a remarkable process of disinflation, with average inflation rates in industrialized countries falling by 10 percentage points and an even sharper decline of the mean rate of inflation in developing countries. Parallel to the decline in inflation rates, a tremendous increase in economic integration -often referred to as globalisation -has been taking place. In this article, we analyse the effects of globalisation on inflation in OECD countries. We theoretically outline different channels through which globalisation may have influenced inflation dynamics and give an overview on the existing empirical evidence on this issue. In the empirical analysis we show that globalisation has contributed to the disinflation process in OECD countries since the 1980s. Inflation rates became much less prone to domestic parameters, especially the domestic output gap. Global factors such as the output gap of the main trading partners became more important in determining national inflation rates. Furthermore, economic freedom and the degree of globalisation are positively related to the disinflation process. Central bank independence seems to have contributed to the decline in inflation rates among OECD countries process, but the effect is rather modest. Though the inertia of inflation can still be observed, the persistence of inflation has considerably declined since the early 1990s.

show abstract

Does Competition Enhancement Have Permanent Inflation Effects?

Cited by 14 publications

References 11 publications

Product Market Regulation And Macroeconomic Performance : A Review Of Cross-Country Evidence

Product Market Regulation And Macroeconomic Performance : A Review Of Cross-Country Evidence

Horizontal innovation-based growth and product market competition

Globalisation and Inflation in OECD Countries

Contact Info

Product

Resources

About