Secular decline in profit rates: time series analysis of a classical hypothesis
Recent global financial crisis and ongoing turbulence in the global economy revived interest in the classical hypothesis of declining profit rates and vanishing profit opportunities as one of the reasons of economic instabilities. This paper, while not joining theoretical debate on the driving facto...
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| Format: | Article |
| Language: | English |
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Università Carlo Cattaneo LIUC
2018-06-01
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| Series: | The European Journal of Comparative Economics |
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| Online Access: | http://ejce.liuc.it/18242979201801/182429792018150104.pdf |
| _version_ | 1819067127036903424 |
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| author | Ivan D. Trofimov |
| author_facet | Ivan D. Trofimov |
| author_sort | Ivan D. Trofimov |
| collection | DOAJ |
| description | Recent global financial crisis and ongoing turbulence in the global economy revived interest in the classical hypothesis of declining profit rates and vanishing profit opportunities as one of the reasons of economic instabilities. This paper, while not joining theoretical debate on the driving factors of profit rates’ decline, reconsiders empirically the hypothesis of the secular decline in economy-wide profit rates. A panel of unit root tests is used and deterministic and stochastic trend models (with or without structural breaks) are estimated. It is shown that instead of continuous downward trend, profit rates exhibit diverse dynamics – random walk, deterioration with breaks, reversals, or the absence of trend. Likewise, it is shown in an exploratory analysis that a variety of factors were determining profit rates, with capital productivity and competitive dynamics in the economy likely being the most salient. |
| first_indexed | 2024-12-21T16:13:18Z |
| format | Article |
| id | doaj.art-a902fc2c3f5945dd8270f14a0b97c94a |
| institution | Directory Open Access Journal |
| issn | 1824-2979 |
| language | English |
| last_indexed | 2024-12-21T16:13:18Z |
| publishDate | 2018-06-01 |
| publisher | Università Carlo Cattaneo LIUC |
| record_format | Article |
| series | The European Journal of Comparative Economics |
| spelling | doaj.art-a902fc2c3f5945dd8270f14a0b97c94a2022-12-21T18:57:46ZengUniversità Carlo Cattaneo LIUCThe European Journal of Comparative Economics1824-29792018-06-011518311810.25428/1824-2979/201801-83-118Secular decline in profit rates: time series analysis of a classical hypothesisIvan D. TrofimovRecent global financial crisis and ongoing turbulence in the global economy revived interest in the classical hypothesis of declining profit rates and vanishing profit opportunities as one of the reasons of economic instabilities. This paper, while not joining theoretical debate on the driving factors of profit rates’ decline, reconsiders empirically the hypothesis of the secular decline in economy-wide profit rates. A panel of unit root tests is used and deterministic and stochastic trend models (with or without structural breaks) are estimated. It is shown that instead of continuous downward trend, profit rates exhibit diverse dynamics – random walk, deterioration with breaks, reversals, or the absence of trend. Likewise, it is shown in an exploratory analysis that a variety of factors were determining profit rates, with capital productivity and competitive dynamics in the economy likely being the most salient.http://ejce.liuc.it/18242979201801/182429792018150104.pdfprofit ratestime seriesunit roottrend estimationclassical political economy |
| spellingShingle | Ivan D. Trofimov Secular decline in profit rates: time series analysis of a classical hypothesis The European Journal of Comparative Economics profit rates time series unit root trend estimation classical political economy |
| title | Secular decline in profit rates: time series analysis of a classical hypothesis |
| title_full | Secular decline in profit rates: time series analysis of a classical hypothesis |
| title_fullStr | Secular decline in profit rates: time series analysis of a classical hypothesis |
| title_full_unstemmed | Secular decline in profit rates: time series analysis of a classical hypothesis |
| title_short | Secular decline in profit rates: time series analysis of a classical hypothesis |
| title_sort | secular decline in profit rates time series analysis of a classical hypothesis |
| topic | profit rates time series unit root trend estimation classical political economy |
| url | http://ejce.liuc.it/18242979201801/182429792018150104.pdf |
| work_keys_str_mv | AT ivandtrofimov seculardeclineinprofitratestimeseriesanalysisofaclassicalhypothesis |