 Corporate Profits and Relationship to InvestmentPhilip Arestis and Elias Karakitsos Chapter 5 in The Post ‘Great Recession’ US Economy, 2010, pp 97-119 from Palgrave Macmillan Abstract: Abstract Profits play a crucial role in business investment and the equity market. The former has a major impact on long-term GDP growth and in business cycle analysis. The equity market, on the other hand, affects both investment and, via the wealth effect, consumer expenditure. But profits are one of the most volatile variables in the economy. Accordingly, they play a key role in long-term growth trends and in business cycle analysis. Until very recently a prevalent view was that the long-term decline in profitability that took place from the late 1960s to the early 1980s had been reversed. Such a decline was associated with the heyday of trade union power and the interference of Keynesian-type demand management with laissez-faire economics. Defenders of such policies attributed the decline to the two oil shocks that redistributed income and wealth from the oil-consuming to the oil-producing countries. There was a strong belief that neoliberalism invigorated the power of the market mechanism and managed to reverse the long-term decline in profitability. Keywords: Monetary Policy; Business Cycle; Profit Margin; Great Recession; Total Profit (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-27610-9_5 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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