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Has long-run profitability risen in the 1990s

John Duca

Economic and Financial Policy Review, 1997, issue Q IV, 2-14

Abstract: This article analyzes the recent rebound in nonfinancial corporate profitability, as measured by after-tax profits as a share of output. Virtually all the resurgence in corporate profitability during the 1990s reflects a cyclical increase in profits and a decline in net interest expense associated with deleveraging and lower interest rates. In this sense, it is not clear that a long lasting upward shift in the economic returns to capital has occurred, after accounting for short-run cyclical-related movements and for how deleveraging and lower interest rates have shifted capital payments away from debtholders toward equityholders.

Keywords: Corporate; profits (search for similar items in EconPapers)
Date: 1997
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