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BPEA Article

Is the Rate of Profit Falling?



THE PRETAX net rate of return on corporate capital reached a thirty-year low in 1974 of only 6.4 percent, according to the estimates that we develop in this paper. Although profits have rebounded substantially since then, there is still a widespread suspicion that the rate of profit may have been declining over a number of years. A primary purpose of this paper is to use the new official estimates of profits, capital consumption, and the capital stock to assess whether such a decline has in fact occurred.


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