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Anton Bobrov and James Traina
 
''The beginning of the trend: Interest rates, profits, and markups''
( 2024, Vol. 44 No.3 )
 
 
Recent highly cited research uses time-series evidence to argue the decline in interest rates led to a large rise in economic profits and markups. We show the size of these estimates is sensitive to the sample start date: The rise in markups from 1984 to 2019 is 14% larger than from 1980 to 2019, a difference amounting to a $3000 change in income per worker in 2019. The sensitivity comes from a peak in interest rates in 1984, during a period of heightened volatility. Our results imply researchers should justify their time-series selection and incorporate sensitivity checks in their analysis.
 
 
Keywords: Influential Observations, Sensitivity Analysis, Secular Trends, Interest Rates, Markups
JEL: E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
C1 - Econometric and Statistical Methods: General
 
Manuscript Received : Mar 19 2024 Manuscript Accepted : Sep 30 2024

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