High markups can exacerbate downturns: IMF paper
An International Monetary Fund paper, published on Monday, says evidence of high markups in South Africa explain the weak co-movement between the output gap and inflation.
Nir Klein, the paper's author, examines the cyclical behaviour of markups between 2008 and 2009 in South Africa and its impact on inflation dynamics over business cycles. Klein notes that the lack of competition in South Africa's product markets, and in particular the high concentration across sectors, is often associated with
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