The downs and ups of mark-ups

Based on sectoral National accounts data and estimates of the implicit rental rate of capital, we calculate price mark-ups for 42 Norwegian industries for the period 1980-2019. The results indicate a broad-based increase in mark-ups over the sample period, with an average increase of roughly 20 percentage points. Taken at face value, the secular rise in mark-ups have added almost 0.5 percentage points to GDP inflation each year since 1980. As part of the analysis, we also trace out movements in factor shares. Our results indicate a widespread decline in capital shares, and more so than for labor shares. Hence, our findings cast doubt on factor substitution as an important explanation for the decline in the aggregate labor share and instead point to increased corporate market power as the main culprit.publishedVersio

Forecasting inflation with an uncertain output gap

The output gap (measuring the deviation of output from its potential) is a crucial concept in the monetary policy framework, indicating demand pressure that generates inflation. The output gap is also an important variable in itself, as a measure of economic fluctuations. However, its definition and estimation raise a number of theoretical and empirical questions. This paper evaluates a series of univariate and multivariate methods for extracting the output gap, and compares their value added in predicting inflation. The multivariate measures of the output gap have by far the best predictive power. This is in particular interesting, as they use information from data that are not revised in real time. We therefore compare the predictive power of alternative indicators that are less revised in real time, such as the unemployment rate and other business cycle indicators. Some of the alternative indicators do as well, or better, than the multivariate output gaps in predicting inflation. As uncertainties are particularly pronounced at the end of the calculation periods, assessment of pressures in the economy based on the uncertain output gap could benefit from being supplemented with alternative indicators that are less revised in real time.Output gap, real time indicators, forecasting, Phillips curve

Frontfagets betydning for lønnsdannelsen i private tjenestnæringer

I denne analysen ser vi nærmere på i hvilken utstrekning lønnsutviklingen i industrien driver lønnsutviklingen i de ulike tjenesteytende næringene i privat sektor, i tråd med prediksjonen fra frontfagsmodellen. Spesielt studerer vi om lønnsevnen i den enkelte tjenestenæring, definert som verdien av bruttoproduktet per arbeidstime, også har betydning. Vi finner at lønnsutviklingen i frontfaget er den viktigste forklaringsfaktoren også på disaggregert nivå, men egen lønnsevne har også (signifikant) betydning i om lag halvparten av tjenestenæringene. Mens lønnsnivået for tjenestenæringene samlet over tid har vokst i samme takt som industrilønna, er dette i mindre grad tilfellet for den enkelte tjenestenæring.publishedVersio

Financial Factors and the Macroeconomy - a Policy Model

This paper documents the theoretical structure of an extension of the Norges Bank policy model NEMO. New features include an explicit treatment of the credit market, including a separate banking sector, a role for housing services and house prices, and the option of using macro-prudential instruments as the LTV-ratio and capital requirements as policy instruments. The model rely on building blocks from the recent literature on the interaction between the financial sector and the real economy

NEMO – a New Macro Model for Forecasting and Monetary Policy Analysis

Macroeconomic models are among the tools used to analyse the Norwegian economy and monetary policy. NEMO is a new macroeconomic model that has been developed by Norges Bank. It plays a key role in designing the interest rate path. In addition to looking at how the model is constructed and quantified and how it works, we focus on why the model was chosen and the properties required. Finally, we provide examples of how the model may be used

Estimation of price elasticities from Norwegian householdsurvey data

In this paper, a subsystem of demand equations is estimated using data from the Norwegian survey of household expenditures 1989-1991. One objective has been to obtain substantial knowledge of Norwegian household demand for a set of food groups, with emphasis on price responses, using two different approaches, namely, the method proposed in Deaton (1990), which utilises unit values instead of market prices, and an alternative approach, which relies on market prices. Comparing the two approaches, we conclude that they produce significantly different results. Possible explanations of this finding and implications for further research are discussed. Keywords: Consumer demand, price elasticities, unit values, qualit

Estimation of price elasticities from Norwegian householdsurvey data

In this paper, a subsystem of demand equations is estimated using data from the Norwegian survey of household expenditures 1989-1991. One objective has been to obtain substantial knowledge of Norwegian household demand for a set of food groups, with emphasis on price responses, using two different approaches, namely, the method proposed in Deaton (1990), which utilises unit values instead of market prices, and an alternative approach, which relies on market prices. Comparing the two approaches, we conclude that they produce significantly different results. Possible explanations of this finding and implications for further research are discussed. Keywords: Consumer demand, price elasticities, unit values, qualit

Estimation of Price Elasticities from Norwegian Household Survey Data

In this paper, a subsystem of demand equations is estimated using data from the Norwegian survey of household expenditures 1989-1991. One objective has been to obtain substantial knowledge of Norwegian household demand for a set of food groups, with emphasis on price responses, using two different approaches, namely, the method proposed in Deaton (1990), which utilises unit values instead of market prices, and an alternative approach, which relies on market prices. Comparing the two approaches, we conclude that they produce significantly different results. Possible explanations of this finding and implications for further research are discussed.Consumer demand; price elasticities; unit values; quality.