The impact of enterprise markups on changes in the CPI in Poland
Article Sidebar
Main Article Content
Abstract
The aim of the study is to present the impact of enterprise markups by sections on changes in the CPI in Poland in the years 2008–2023. The VAR model was developed to reveal the interdependencies between changes in markups in nine major sections of non-financial corporations and changes in the CPI. The results of the model, the impulse response function and the variance decomposition confirmed the differentiated impact of markups on inflation changes. To the greatest extent, changes in the CPI, as much as 30%, were explained by the markups of enterprises in real estate services (L), and mining and quarrying (B) sections. The least pro-inflationary contribution to the CPI explanation was shown by markups from information and communication (J), water supply, sewage and waste management, reclamation (E), trade and repair of motor vehicles (G) and the generation and supply of electricity, gas, steam, and hot water D (less than 1%). The degree of explanation of the CPI by markups projected in the variance decomposition increased in the short term (to 26% in the 1st year), stabilizing at a higher level (35% in the years 3–5) in the medium and long term.
Downloads
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Balke, N. S., Wynne M. A. (2000). An equilibrium analysis of relative price changes and aggregate inflation. Journal of Monetary Economics, 45, pp. 269–292.
Barkan, O., Benchimol, J., Caspi, I., Cohen, E., Hammerand, A., Koenigstein, N. (2023). Forecasting CPI Inflation Components with Hierarchical Recurrent Neural Networks. International Journal of Forecasting, 39 (3), pp. 1145–1162.
Binder, C. (2017). Measuring Uncertainty based on rounding new method and application to inflation expectations. Journal of Monetary Economics, 90, pp. 1–12.
Binder, C. (2020) Coronavirus fears and macroeconomic expectations. Review of Economics and Statistics, 102, pp. 721–730.
Blanchard, O. J., Jordi Gali (2007). The macroeconomic effects of oil shocks: Why are the 2000s so different from the 1970s? NBER Working Paper, 13368.
Blinder, A. S., Rudd, J. B. (2008). The Supply-Shock Explanation of the Great Stagflation Revisited. NBER Working Paper, 14563, DOI:10.3386/w14563
Boissay, F., De Fiore, F., Igan, D., Tejada, A. P., Rees, D. (2022). Are major advanced economies on the verge of a wage-price spiral? BIS Bulletin, 53, pp. 1–8.
Coibion, O., Gorodnichenko, Y., Knotek, E., Schonle, R. (2023). Average inflation targeting and household expectations. Journal of Political Economy Macroeconomics, 1 (2), pp. 403–446.
Coibion, O., Gorodnichenko, Y., Kumar, S. Pedemonte, M. (2020, May). Inflation expectations as a policy tool? Journal of International Economics, 124 (2020) 103297, pp. 1–27.
D’Acunto, F., Fuster, A., Weber. M. (2021). Diverse policy committees can reach underrepresented groups. NBER Working Paper, 2975, 1–85.
D’Acunto, F., Hoang, D., Paloviita, M., Weber, M. (2020). Effective policy communication, Targets vs. Instruments, Chicago Booth Research Paper, 148, pp. 1–43.
Dąbrowski, I (2016), Mechanizmy sprzężeń zwrotnych a równowaga i dynamika systemu ekonomicznego [Feedback mechanisms and the balance and dynamics of the economic system].
Warszawa: Oficyna Wydawnicza SGH.
Friedman, M. (1959, August). The Demand for Money – Some Theoretical and Empirical Results. Journal of Political Economy, pp. 327–351.
Friedman, M. (1970, Mar-Apr). A Theoretical Framework for Monetary Analysis. Journal of Political Economy, 78 (2), pp. 193–238.
Glover, A., Mustre-del-Rίo, J., Ende-Becker, A. (2023). How Much Have Record Corporate Profits Contributed to Recent Inflation. Economic Review, 12, pp. 1–13.
Goodhart, C., Tsomocos, D. P., Wang, X. (2023). Bank credit, inflation, and default risks over an infinite horizon. Journal of Financial Stability, 67 (2023) 101131, pp. 1–16.
Gomes, S., Jacquinot, P., Lozej, M. (2023). Labour market differences and monetary policy in the euro area. SUERF Policy Brief, 575, pp. 1–9.
Hamilton, J. D. (1983, Apr). Oil and the macroeconomy since World War II. Journal of Political Economy 91, pp. 228–248.
Hall, R. E. (2023). A Major Shock Makes Prices More Flexible and May Result in a Burst of Inflation or Deflation. NBER Working Paper, 31025, pp. 1–20, DOI:10.3386/w31025
Ida, D. (2020). Sectoral inflation persistence and optimal monetary policy. Journal of Macroeconomics, 65 (C).
Johansen, S. (1995). Likelihood – Based Inference in Cointegrated Vector Autoregressive Models. Oxford: Oxford University Press, pp. 1–278.
Kabundi, A., De Simone, F. (2022). Euro area banking and monetary policy shocks in the QE era. Journal of Financial Stability, 63 (2022) 101062, pp. 1–27.
Kosztowniak, A. (2023a). Impact of inflation, markups and wages on changes in the profitability of enterprises in Poland. Journal of Finance and Financial Law, 4 (40), pp. 201–224.
Kosztowniak, A. (2023b). The impact of markups and wages on changes in the level of inflation in Poland. Managerial Economics, 24 (2), pp. 145–164, https://doi.org/10.7494/manage. 2023.24.2.145
Kufel, T. (2011). Ekonometria [Econometrics]. Warszawa: Wydawnictwo Naukowe PWN, pp. 1–165.
Modigliani, F. (1977). The Monetarist Controversy or, should we Forsake Stabilization Policies? The American Economic Review, 67 (2), pp. 1–27.
Perry, M. K. (1982). Oligopoly and Consistent Conjectural Variations. The Bell Journal of Economics, 13 (1), pp. 197–205.
Schapiro, A. H. (2022). How Much Do Supply and Demand Drive Inflation? FRBSF Economic Letter, 21, pp. 1–6.
Schapiro, A. H. (2023). How Much Do Labor Costs Drive Inflation? Research from the Federal Reserve Bank of San Francisco. FRBSF Economic Letter, 30, pp. 1–6.
Wang, Z., Wei., S.‑J., Zhu, K. (2013). Quantifying international production sparing at the bilateral
and sector levels. NBER Working Papers, 1967, pp. 1–92, DOI: 10.3386/w19677
Werning, I. (2022). Expectations and the Rate of Inflation. NBER Working Paper, 30260, 1–37, DOI: 10.3386/w30260 32. Yotzov, I., Bloom, N., Bunn, P., Mizen, P., Ozturk, O., Thwaites, G. (2023). Firm inflation perceptions and expectations, evidence from the Decision Marker Panel. NBER Working Paper, 31300, pp. 1–25, DOI: 10.3386/w31300
Internet sources
Barlevy, G., Luojia, H. (2023, Mar). Unit Labor Costs and Inflation in the Non-Housing Service Sector. Chicago Fed Letter, 477, https://www.chicagofed.org/publications/chicagofed-letter/2023/477 [accessed: 10.04.2024].
Binder, C. C. (2021, Oct). Household expectations and the release of macroeconomic statistics. Economic Letters, 207, pp. 1–4, https://www.sciencedirect.com/science/article/pii/S0165176521003189 [accessed: 10.04.2024].
Engle, R. F., Granger, C. W. J. (1987). Co-integration and Error Correction: Representation, Estimation, and Testing. Econometrica, 55, March, pp. 251–276, https://www.jstor.org/stable/1913236 [accessed: 10.04.2024].
Friedman, M. (1984, May). Lessons from the 1979–1982 Monetary Policy Experiment. NBER Working Paper, 1272, pp. 1–15, https://www.nber.org/system/files/ working_papers/w1272/w1272.pdf [accessed: 10.04.2024].
Friedman, M. (1961). The lag in effect of monetary policy, Journal of Political Economy, 69 (5), 447–466, https://www.jstor.org/stable/1828534 [accessed: 10.04.2024].
Glick, R., Sylvain, L., Mollie, P. (2022). Will Workers Demand Cost-of-Living Adjustments? FRBSF Economic Letter, 2022–21, pp. 1–6, https://www.frbsf.org/wp-content/uploads/sites/4/el2022-21.pdf [accessed: 10.04.2024].
Johansen, S. (1992). Determination of Cointegration Rank in the Presence of a Linear Trend. Oxford Bulletin of Economics and Statistics, 54, 3 (1992), pp. 383–397, https://doi. org/10.1111/j.1468–0084.1992.tb00008.x [accessed: 10.04.2024].
Johansen, S. (1991). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica, 59 (6), https://www.jstor.org/stable/i352324 [accessed: 10.04.2024].
Leduc, S., Liu, Z. (2023 Feb 1). Automation, Bargaining Power, and Labor Market Fluctuations Federal Reserve Bank, Working Paper, 2019–17, https://doi.org/10.24148/wp2019-17 [accessed: 10.04.2024].
NBP (2023, Mar 3). Metodyka obliczania miar inflacji bazowej publikowanych przez Narodowy Bank Polski [Methodology for calculating core inflation measures published by the National Bank of Poland], https,//static.nbp.pl/dane/inflacja /metodyka.pdf [accessed: 10.09.2023].
Reich, R. B. (2022). Corporate Profits Are Soaring as Prices Rise, Are Corporate Greed and Profiteering Fueling Inflation? Testimony to the U. S. Senate Budget Committee, April 5, https://www.budget.senate.gov/imo/media/doc/Robert%20Reich%20-%20Testimony%20-%20U.S.%20Senate%20Budget%20Committee.pdf [accessed: 10.04.2024].
SP (2023). Macroeconomics indicators, quarterly macroeconomic indicators [Statistics Poland), Wskaźniki makroekonomiczne, Kwartalne wskaźniki makroekonomiczne], https://stat.gov. pl/wskazniki-makroekonomiczne/
Traina, J. (2018). Is Aggregate Market Power Increasing? Production Trends Using Financial Statements. Stigler Center for the Study of the Economy and the State. New Working Paper Series, 17, pp. 1–21, https://doi.org/10.2139/ssrn.312084 [accessed: 10.04.2024].