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Profit dynamics across the largest euro area countries and sectors

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  • Maurin, Laurent
  • Roma, Moreno
  • Vetlov, Igor

Abstract

This paper explores the behavior of profits in the four largest euro area countries (Germany, France, Italy and Spain) and the euro area as a whole, while at the same time considering three main sectors (manufacturing, construction and services) in each economy over the period 1988–2010. The paper presents stylized facts about profit developments and, applying a vector autoregressive modeling framework, discusses the sensitivity of profits to four distinctive structural shocks (a demand shock, an employment shock, a wage and price mark-up shocks). In addition, it provides the shock decomposition of historical developments in profits across countries and sectors. JEL Classification: C32, E23, E25

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 1410.

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Date of creation: Dec 2011
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Handle: RePEc:ecb:ecbwps:20111410

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Keywords: historical decomposition; Impulse responses; Profits; sectoral determinants; VARs;

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  17. Martin, Christopher, 1993. "Price adjustment and market structure," Economics Letters, Elsevier, vol. 41(2), pages 139-143.
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  19. Runkle, David E, 1987. "Vector Autoregressions and Reality: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 454, October.
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