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VARIABLE MARKUP IN A SMALL OPEN ECONOMY WITH INFLATION
Author(s) -
Bianconi M.
Publication year - 1991
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1991.tb00364.x
Subject(s) - markup language , inflation (cosmology) , economics , variable (mathematics) , small open economy , jump , exchange rate , monetary economics , econometrics , computer science , mathematics , physics , xml , mathematical analysis , quantum mechanics , theoretical physics , operating system
This paper analyzes markup disturbances in a small open economy with flexible exchange rates and secular inflation. Specifically, I assume that the private sector fully controls a variable markup over costs. The markup is shown to vary (pro)anticyclically depending on the magnitude of the initial jump in the exchange rate following the disturbance.