THE

CONTRIBUTION
OF FIRM
PROFITS TO THE
RECENT RISE IN
INFLATION

Presented
by Ahmad
al Masri
TITLE

ABSTRACT

AUTHOR

DATE

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BACKGROUND AIM OF THE
PAPER

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The article seems to cover the necessary chapters,
including an introduction, methodology, results,
discussion, and conclusion. The sections are
organized logically, presenting a coherent argument
regarding the relationship between markup growth
and inflation in canada.
 METHOD OF RESEARCH
The research employs a methodological approach using firm-level data provided by Statistics
Canada. The study measures markup growth for private non-financial Canadian firms and
compares the average growth rate of markups with the Consumer Price Index (CPI) inflation
for the years 2018–2022. Additionally, the research decomposes changes in measured markups
to ascertain whether growth was driven by demand or cost pressures. The findings suggest that
while firms' markups did grow after the onset of the COVID-19 pandemic, this growth was not
significantly inflationary. The study concludes that the recent rise in inflation was primarily
driven by changes in costs rather than firms leveraging market power to increase prices.

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 IS THE STYLE AND THE
LANGUAGE ACADEMIC?
The article provided adopts an academic style and language. Here are
some characteristics that align with academic writing:
1. Formal Tone: The language used is formal and objective.
2. Technical Terminology: It employs specific terms related to
economics, such as "markup," "inflation," "costs," and "firm-level
data," demonstrating a grasp of technical concepts within the field.
3. Structured Sections: The text is organized into sections with clear
headings, typical of academic writing, allowing readers to follow the
logical flow of the argument.
Overall, the language, structure, and approach used in the article
excerpt reflect the conventions of academic writing, particularly
within the field of economics or related disciplines.

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 REFERENCES

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 IMPORTANCE OF THE ARTICLE
• This article holds significance within
the context of understanding the
factors contributing to rising inflation,
specifically in the Canadian economy.
Its goal appears to be examining
whether firms' markup increases,
potentially indicating the exercise of
market power, have played a
substantial role in driving inflation.
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The importance of this article lies in providing
empirical evidence that challenges the hypothesis
linking firms' increased market power (as indicated
by markup growth) directly to inflation. By showing
that markup growth primarily resulted from cost
reductions and did not significantly contribute to
inflation, it contributes to a more nuanced
understanding of the factors driving inflationary
pressures within the Canadian economy. This nuanced
understanding could have implications for
policymakers and economists seeking to address and
manage inflationary trends.
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 THANK YOU

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