This presentation is part of: D00-1 Microeconomic Theory

Interpretation of Markup Behavior in Brazilian Industry Based on Micro-Macro Relationships

Luiz Fernando Cerqueira, Ph.D. and Carmem A. Feijo, Ph.D. Economics, Federal Fluminense University at Niterói, Rua Barata Ribeiro, # 803, app. 103 - Copacabana, Rio de Janeiro, 22051-000, Brazil

An interpretation of the mark up behavior in the Brazilian industry in the 1990s based on micro-macro relationships
Abstract

Our objective in this paper is to investigate the determinants of mark up in the Brazilian industrial firms in the 1990s, a period marked by slow economic dynamism and relevant changes in the macroeconomic environment. Based on the post Keynesian theory of price determination, we discuss that price changes depend on decision about the mark up. We employed a panel data basis and cointegration and GMM estimation procedures. The econometric exercise developed showed how microeconomic and macroeconomic variables affected the determination of the mark up. A negative relation was found between demand variation and mark up variation, suggesting  that it evolved in an anticyclic way.

Key words: pricing decisions, mark up determination, micro and macroeconomic interactions, manufacturing industry, panel data analysis, cointegration and GMM estimation methods.
JEL: C33, D21, E31, L11, L16, O14.