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Managing profits for economic health

Author

Listed:
  • Jonath, Arthur
  • O’Connell, John P.
  • Khorasani, Fred

Abstract

This paper examines how corporate profit distribution choices impact macroeconomic health, arguing that wise managing of profits maximizes economic stability and robustness. Analogies of economic cash flow with physical heat energy flow and entropy generation are given to help appreciate the impacts of profit decisions. We conclude that direct investment of profits to generate new value is better for economic health than delaying reinvestment, sequestering resources in dormant accounts or for luxury purchases, or buying back stock. A mechanism to foster healthy profit decisions is suggested.

Suggested Citation

  • Jonath, Arthur & O’Connell, John P. & Khorasani, Fred, 2026. "Managing profits for economic health," Economics Letters, Elsevier, vol. 258(C).
    • Handle: RePEc:eee:ecolet:v:258:y:2026:i:c:s0165176525005592
    DOI: 10.1016/j.econlet.2025.112722
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    References listed on IDEAS

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    1. Iryna Veryzhenko & Arthur Jonath & Etienne Harb, 2022. "Non-Value-Added Tax to improve market fairness and quality," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-30, December.
    2. Adrien Auclert & Matthew Rognlie & Ludwig Straub, 2023. "The Trickling Up of Excess Savings," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 70-75, May.
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