Does Competition Enhancement Have Permanent Inflation Effects?

This paper presents empirical evidence that a higher degree of product market competition leads to a permanently lower inflation rate. Among a broad set of possible candidate variables, the indicator for product market competition used in this paper (the markup) is superior in explaining inflation d...

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Bibliographic Details
Published in:Kyklos Vol. 56; no. 1; pp. 69 - 95
Main Author: Cavelaars, Paul
Format: Article
Published: Wiley-Blackwell 2003
Subjects:
Online Access:View this record in EBSCOhost
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        atl: Does Competition Enhancement Have Permanent Inflation Effects?
      aug:
        au: Cavelaars, Paul
      su:
        Monopolistic competition
        Mathematical models of economic competition
        Mathematical models of inflation
        Mathematical models
        Price markup
      sug:
        subj:
          Monopolistic competition
          Mathematical models of economic competition
          Mathematical models of inflation
          Mathematical models
          Price markup
      ab: This paper presents empirical evidence that a higher degree of product market competition leads to a permanently lower inflation rate. Among a broad set of possible candidate variables, the indicator for product market competition used in this paper (the markup) is superior in explaining inflation differentials across twenty-one OECD countries and also across the subset of EU member states. Using a regulation index, it is confirmed that the markup is indeed a good proxy for product market competition. Dieses Papier erbringt empirische Evidenz dafür, dass eine Zunahme des Wettbewerbs in den Produktmärkten die Inflationsrate dauerhaft senkt. Unter einer breiten Palette von möglichen Variablen ist der im vorliegenden Aufsatz zugrunde gelegte Indikator für Produktmarktwettbewerb (der Markup) besonders geeignet, die Inflationsunterschiede zwischen 21 OECD-Ländern und auch zwischen den EU-Mitgliedstaaten zu erklären. Unter Anwendung eines Regulierungsindexes wird bestätigt, dass der Markup tatsächlich einen guten Näherungswert für Warenmarktwettbewerb darstellt. Ce document présente une preuve empirique selon laquelle un niveau de concurrence accru entre produits sur un même marché aboutit à une limitation permanente du taux d'inflation. Parmi un vaste ensemble de variables candidates potentielles, l'indice révélateur de la concurrence entre produits sur un marché utilisé dans ce document (la marge bénéficiare) est d'un intérêt supérieur dans l'explication des écarts constatés entre l'inflation dans les vingt et un pays de l'OCDE ainsi que dans le sousensemble d'états membres de l'UE. L'utilisation d'un indice réglementaire confirme que la marge bénéficiare est effectivement représentative de la concurrence entre produits sur un même marché. Reprinted by permission of the publisher.
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    language: English
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