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Inflation and Profits — The SVA and Depreciation Adjustments in the National Accounts

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  • BRYAN HAIG

Abstract

This paper argues that the figures of profits contained in the national accounts are inappropriate in assessing the performance of industry. The error lies in deducting amounts for stock valuation adjustment from recorded profits. There is a discussion of the arguments usually proposed by national accountants for the deduction and it is concluded that these arguments are invalid. A suggestion is made that the amount of the stock valuation adjustment should be regarded as reflecting the delay in passing on costs of production, and this should be recorded in the national accounts as a timing difference between estimates of national expenditure (which exclude the stock valuation adjustment) and national product (where profits include the stock valuation adjustment).

Suggested Citation

  • Bryan Haig, 1982. "Inflation and Profits — The SVA and Depreciation Adjustments in the National Accounts," The Economic Record, The Economic Society of Australia, vol. 58(4), pages 357-366, December.
  • Handle: RePEc:bla:ecorec:v:58:y:1982:i:4:p:357-366
    DOI: 10.1111/j.1475-4932.1982.tb00386.x
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    References listed on IDEAS

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    1. Aaron, Henry J, 1976. "Inflation and the Income Tax," American Economic Review, American Economic Association, vol. 66(2), pages 193-199, May.
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    Cited by:

    1. Z. P. Matolcsy, 1984. "The Micro Effects of Inflation on Corporate Taxation and Profitability: Some Empirical Evidence for Seventeen Industry Groups," The Economic Record, The Economic Society of Australia, vol. 60(4), pages 356-365, December.

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