Profit Dynamics Across the Largest Euro Area Countries and Sectors

46 Pages Posted: 21 Dec 2011

See all articles by Laurent Maurin

Laurent Maurin

European Central Bank (ECB) - Directorate General Economics

Moreno Roma

European Central Bank (ECB)

Igor Vetlov

Bank of Lithuania

Date Written: December 8, 2011

Abstract

This paper explores the behavior of profits in the four largest euro area countries (Germany, France, Italy and Spain) and the euro area as a whole, while at the same time considering three main sectors (manufacturing, construction and services) in each economy over the period 1988–2010. The paper presents stylized facts about profit developments and, applying a vector autoregressive modeling framework, discusses the sensitivity of profits to four distinctive structural shocks (a demand shock, an employment shock, a wage and price mark-up shocks). In addition, it provides the shock decomposition of historical developments in profits across countries and sectors.

Keywords: Profits, sectoral determinants, VARs, impulse responses, historical

JEL Classification: C32, E23, E25

Suggested Citation

Maurin, Laurent and Roma, Moreno and Vetlov, Igor, Profit Dynamics Across the Largest Euro Area Countries and Sectors (December 8, 2011). ECB Working Paper No. 1410, Available at SSRN: https://ssrn.com/abstract=1969798

Laurent Maurin (Contact Author)

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Moreno Roma

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Igor Vetlov

Bank of Lithuania ( email )

Totoriu 4
Vilnius, LT-01121
Lithuania

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