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Measuring the Profit Rate in an Inflationary Context: The Case of Brazil, 1955–2008

Author

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  • Adalmir Antonio Marquetti
  • Henrique Morrone
  • Alessandro Miebach
  • Luiz Eduardo Ourique

Abstract

A debate in Marxist literature concerns the methodology for measuring the profit rate. This paper investigates this question computing the rate of profit at historical cost, current cost, constant prices, and constant GDP price for Brazil in the 1955–2008 period. Like many developing countries, Brazil experienced medium to high inflation during this period. Inflation determined the trend and cyclical movements of the profit rate at historical cost. It increased in years of rising, and declined in years of falling, inflation. The profit rate at historical cost was at odds with Brazilian economic history. The profit rate at current costs remained unaffected by the inflation rate, and its movements correspond to the historical phases of the Brazilian economy. The same is true for the profit rate at constant prices and at constant GDP price. However, the profit rate at constant prices does not account for changes in relative prices, while the profit rate at constant GDP price is computed using a weighted average of the current and past relative prices. JEL Classification: E01, B51

Suggested Citation

  • Adalmir Antonio Marquetti & Henrique Morrone & Alessandro Miebach & Luiz Eduardo Ourique, 2019. "Measuring the Profit Rate in an Inflationary Context: The Case of Brazil, 1955–2008," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(1), pages 52-74, March.
    • Handle: RePEc:sae:reorpe:v:51:y:2019:i:1:p:52-74
    DOI: 10.1177/0486613416689834
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    References listed on IDEAS

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    1. Jose Raimundo Trindade & Paul Cooney & Wesley Pereira de Oliveira, 2016. "Industrial Trajectory and Economic Development," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(2), pages 269-286, May.
    2. Freeman, Alan, 2012. "The Profit Rate in the Presence of Financial Markets: a Necessary Correction," MPRA Paper 52625, University Library of Munich, Germany, revised 01 Jul 2012.
    3. Weisskopf, Thomas E, 1979. "Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy," Cambridge Journal of Economics, Oxford University Press, vol. 3(4), pages 341-378, December.
    4. Deepankar Basu, 2013. "Replacement versus Historical Cost Profit Rates: What is the Difference? When Does it Matter?," Metroeconomica, Wiley Blackwell, vol. 64(2), pages 293-318, May.
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    Cited by:

    1. Doré, Natalia I. & Teixeira, Aurora A.C., 2023. "The role of human capital, structural change, and institutional quality on Brazil's economic growth over the last two hundred years (1822–2019)," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 1-12.
    2. Henrique Morrone & Adalmir Antonio Marquetti & Alessandro Donadio Miebach, 2023. "Productive and Unproductive Sectors’ Interactions in Brazil: A Miyazawa Analysis," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(2), pages 251-268, June.
    3. Adalmir Antonio Marquetti & Catari Vilela Chaves & Leonardo Costa Ribeiro & Eduardo da Motta e Albuquerque, 2021. "Rate of Profit in the United States and in China (2007–2014): A Look at Two Trajectories and Strategic Sectors," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(1), pages 116-142, March.
    4. Guilherme Klein Martins & Fernando Rugitsky, 2021. "The Long Expansion and the Profit Squeeze: Output and Profit Cycles in Brazil (1996–2016)," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(3), pages 373-397, September.

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    More about this item

    Keywords

    rate of profit; aggregate capital stocks; rate of inflation;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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