Price formation in an open economy: Theory and evidence for the United Kingdom, 1951-1991

Christopher Martin

doi:10.1111/j.1468-0297.1997.tb00054.x

Price formation in an open economy: Theory and evidence for the United Kingdom, 1951-1991

Christopher Martin

Research output: Contribution to journal › Article › peer-review

15 Citations (SciVal)

Abstract

Price formation is an increasingly important part of modern macroeconomics. However, the empirical literature on price-setting is diverse and confused. This paper uses cointegration techniques to test theories of price-setting on UK aggregate data for 1951-91. We find: (i) domestic prices are determined by both domestic costs and world prices and (ii) at the macroeconomic level, prices are related to marginal cost rather than average or normal cost.

Original language	English
Pages (from-to)	1391-1404
Number of pages	14
Journal	Economic Journal
Volume	107
Issue number	444
DOIs	https://doi.org/10.1111/j.1468-0297.1997.tb00054.x
Publication status	Published - 1 Sept 1997

ASJC Scopus subject areas

Economics and Econometrics

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10.1111/j.1468-0297.1997.tb00054.x

Cite this

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Price formation in an open economy: Theory and evidence for the United Kingdom, 1951-1991

Abstract

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