The Macroeconomics Seminar:
Time: 12:15 pm – 13:30 pm
Date: 04 th of April 2022

Room 3001

Basile GRASSI (Bocconi University) “The Hitchhiker’s Guide to Markup Estimation”

Abstract : How do estimates of firm-level markups that rely on production function estimations depend on common data limitations? With a tractable analytical framework, simulation from a quantitative model, and firm-level administrative production and pricing data, we study biases due to the use of revenue instead of quantity, and due to production function misspecification. Estimates from revenue mismeasure the level of markups, but do contain useful information about true markups. Conversely, misspecified production functions have little effect on the estimated average markup but reduce their information content. Finally, revenue and quantity markups display similar correlations with variables such as profitability and market share in our data.

Joint work : Maarten De Ridder (LSE)  and Giovanni Morzenti (Boccony University)

Organizers:
Alessandro RIBONI (Polytechnique)

Sponsors:
CREST