Claeysa, PeterCosta, Luís F.2024-02-232024-02-232012Claeysa, Peter and Luís F. Costa .(2012). “A note on the relationship between the cyclicality of markups and fiscal policy”. IREA - Research Institute of Applied Economics, Working Paper 2012/15. (Search PDF in 2024).http://hdl.handle.net/10400.5/30190In this paper, we demonstrate that, in a simple endogenous markup model, the cyclical behavior of government spending. Under plausible parameter assumptions, pro-cyclical spending results in less counter-cyclical mark-ups. We use IV estimators to test cyclicality of government spending in a dataset of 13 OECD countries over 1970-2007 and compare the results to makeup cyclicality implicit in [1] . We confirm a weak version of our theoretical hypothesis. Our paper supplies an explication that reconciles the variety of empirical findings on the cyclical behavior of markups and fiscal policy.engBusiness Cycle and FluctuationsMark-Up ModelFiscal PolicyOECD Countriesworking paper