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| Anton Bobrov and James Traina |
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| ''The beginning of the trend: Interest rates, profits, and markups'' |
| ( 2024, Vol. 44 No.3 ) |
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| 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. |
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| 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 |
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| Manuscript Received : Mar 19 2024 | | Manuscript Accepted : Sep 30 2024 |
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