Profit rate in the US, 1949–2007: a Markov switching assessment

ABSTRACT

The article investigates the growth in the general profit rate in the US during the 1949–2007 period with a Markov switching model. The evidence is consistent with a long swing with means displaying opposite signs under the two regimes (increasing or declining) and high degree of persistence within each regime. The results for this nonlinear approach reinforce previous empirical evidence that does not provide support for a systematic and declining tendency in profit rate as advanced in the Marxian literature.

KEYWORDS:

• Markov switching
• long swings
• declining tendency
• profit rate

JEL CLASSIFICATION:

• B51
• C22

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ I thank Deepankar Basu for kindly providing the data used in this article.