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The Analysis and Modeling of The Profitability Feedback Process – A Dynamic Model on Portugal’s National Economy

Author

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  • Bianca-Ioana Popescu

    (The Bucharest University of Economic Studies, Romania)

  • Emil Scarlat

    (The Bucharest University of Economic Studies, Romania)

Abstract

The aim of the present paper is to underline the influence of the profitability process at macroeconomic level will exert on real economy. Until now relevant literature has been focused on firms, banks and industries but only with the objective of comparing past profitability of the studied entity or comparison to other competitors on the market and with microfoundation calculus - profitability being calculated for a panel of firms in the studied industry. The model of the Profitability Feedback Process is capable of surprising the influences the concept of profitability will have at macroeconomic level as being considered to be one of the auto-regulation processes of a national economy. The simulations have been made on EUROSTAT’s official stats of Portugal between 2005 and 2012 annual data and the simulations have revealed robust behavior of the system in relation to the profitability and the economic context and sustain the rationality of our attempt.

Suggested Citation

  • Bianca-Ioana Popescu & Emil Scarlat, 2015. "The Analysis and Modeling of The Profitability Feedback Process – A Dynamic Model on Portugal’s National Economy," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 3(2), pages 30-41.
    • Handle: RePEc:ejn:ejefjr:v:3:y:2015:i:2:p:30-41
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