Dispersion of company markups internationally

Stéphane Auray and AurélienEyquem

The strong globalization of economies has increased interest in the importance of markups for companies with an international orientation. A markup is defined as the difference between the marginal cost of production and the selling price. Empirical evidence is accumulating to show that these markups have increased significantly in recent years (Autor, Dorn, Katz, Patterson, and Reenen, 2017; Loecker, Eeckhout, and Unger, 2020) and that large corporations account for a growing share of the aggregate fluctuations (Gabaix, 2011). Moreover, the dispersion of markups is considered in the literature as a potential source of a misallocation of resources – capital and labour – in both economies considered to be closed to international trade (see Restuccia and Rogerson, 2008, or Baqaee and Farhi, 2020) and economies considered to be open to trade (Holmes, Hsu and Lee, 2014, or Edmond, Midrigan and Xu, 2015). Finally, it has recently been shown by Gaubert and Itskhoki (2020) that these markups are a key determinant of the granular origin – i.e. linked to the activity of big exporters – of comparative advantages, or in other words, they may be a determinant of trade competitiveness.

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No love lost for Chinese investors!

By Sarah Guillou

In his speech of 15 January 2017, France’s Minister of Economy and Finance, Bruno Le Maire, speaks of “plundering investments”, suspecting Chinese investors of wanting to “loot” French technology. Continue reading “No love lost for Chinese investors!”

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Leave the euro?

By Christophe BlotJérôme CreelBruno DucoudréPaul HubertXavier RagotRaul SampognaroFrancesco Saraceno, and Xavier Timbeau

Evaluating the impact of France leaving the euro zone (“Frexit”) is tricky, as many channels for doing this exist and the effects are uncertain. However, given that this proposal is being advanced in the more general debate over the costs and benefits of membership in the European Union and the euro, it is useful to discuss and estimate what is involved. Continue reading “Leave the euro?”

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