Journal Article

Has long-run profitability risen in the 1990s

Abstract: This article analyzes the recent rebound in nonfinancial corporate profitability, as measured by after-tax profits as a share of output. Virtually all the resurgence in corporate profitability during the 1990s reflects a cyclical increase in profits and a decline in net interest expense associated with deleveraging and lower interest rates. In this sense, it is not clear that a long lasting upward shift in the economic returns to capital has occurred, after accounting for short-run cyclical-related movements and for how deleveraging and lower interest rates have shifted capital payments away from debtholders toward equityholders.

Keywords: Corporate profits;

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Economic and Financial Policy Review

Publication Date: 1997

Issue: Q IV

Pages: 2-14