Monthly Archives: November 2015

The Levy-Kalecki profit equation in action: the Spanish case


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Martin Wolf has recently reminded us the role that corporate surpluses played during the ‘Great Moderation’. He reports the well-known fact that while corporations saw how their gross savings (i.e. current revenues minus current expenses, capital expenses excluded) rose during this period, the level of corporate investment remained stagnant. This means, as a matter of logical necessity, that corporations were accumulating net assets over the entire period. Wolf concludes that ‘it has to be accepted that, so long as the corporate sector runs a structural financial surplus, macroeconomic balance is likely to require fiscal deficits’, something which I can hardly disagree with.

At the same time, the Spanish press (here, in Spanish) reports that non-financial corporations have seen a growth in profits, during the first three quarters of 2015, of 28.6% (in comparison to the first three quarters of 2014), due mainly to ‘an improvement of the economic activity’ and the impact of some one-off (non-recurrent) revenues. Both articles have nudged me enough to provide an update of the Spanish macroeconomic profit series and to explain their implications for the Spanish macroeconomic performance.

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