This paper analyzes markup responses of Danish firms to Chinese imports. Besides negative markup responses due to competitive pressure, we present some evidence for marginal cost savings related to Chinese intermediate goods imports which tend to raise firm-level markups.

In many forward-looking macroeconomic models, such as the New Keynesian model, firms' expectations about the future play a key role in determining outcomes today. We examine this hypothesis using a novel panel dataset on firms actual and expected price changes collected by the Confederation of...