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Why Have Corporate Profits Declined? An International Comparison

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  • Uctum, Merih

Abstract

The paper compares the trends and determinants of US profits with those of Japan, Germany, and Canada in a model of pricing-to-market in the export and domestic markets. It is found that during the 1970s increasing unit production costs lowered profits in all countries. After 1980, cost factors still affected profits except in the USA where lower real import prices depressed profits. It is shown that a currency appreciation hurts US profits three times more than Japanese profits via the imported inputs channel. This finding may explain why an overvalued currency is sustainable for a longer period in Japan than in the USA. Copyright 1998 by Blackwell Publishing Ltd.

Suggested Citation

  • Uctum, Merih, 1998. "Why Have Corporate Profits Declined? An International Comparison," Review of International Economics, Wiley Blackwell, vol. 6(2), pages 234-251, May.
  • Handle: RePEc:bla:reviec:v:6:y:1998:i:2:p:234-51
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    Cited by:

    1. Merih Uctum & Sandra Viana, 1999. "Decline in the US profit rate: a sectoral analysis," Applied Economics, Taylor & Francis Journals, vol. 31(12), pages 1641-1652.
    2. Nazli Toraganli, 2010. "Exchange Rate Pass-Through and Exposure in the Turkish Economy," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 10(1), pages 47-69.

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