The hitchhiker's guide to markup estimation: assessing estimates from financial data

De Ridder, Maarten ORCID: 0009-0002-3550-2556, Grassi, Basile and Morzenti, Giovannie (2025) The hitchhiker's guide to markup estimation: assessing estimates from financial data. Econometrica. ISSN 0012-9682

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Abstract

Macroeconomic outcomes depend on the distribution of markups across firms and over time, making firm-level markup estimates key for macroeconomic analysis.Methods to obtain these estimates require data on the prices that firms charge. Firm-level data with wide coverage, however, primarily comes from financial statements, which lack information on prices. We use an analytical framework to show that trends in markups over time or the dispersion of markups across firms can still be well-measured with such data. Measuring the average level of the markup does require pricing data, andwe propose a consistent estimator for such settings.We validate the analytical results using simulations of a quantitative macroeconomic model and offer supporting evidence from firm-level administrative production and pricing data. Our analysis supports the use of financial data to measure trends in aggregate markups.

Item Type:	Article
Additional Information:	© 2025 The Author
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Date Deposited:	22 Sep 2025 09:36
Last Modified:	01 Oct 2025 03:42
URI:	http://eprints.lse.ac.uk/id/eprint/129556

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