Profit rates in the developed capitalist economies: a time series investigation.

This paper examines whether there is empirical evidence to support the hypothesis of secular decline in the economy-wide profit rates as predicted by classical economic theories. We specifically consider profit rates in the OECD economies based on the national accounts data contained in the Extended Penn World Table database. In our analysis we use linear trend, Augmented Dickey-Fuller (ADF) tests, and also allow for structural breaks and instabilities in the series. Results suggest that profit rates in OECD economies exhibited a wide variety of patterns, including stochastic and deterministic trends, random walk, reversals, as well as stability. Secular decline (fluctuation around falling deterministic trend) hypothesis is supported for Canada, Portugal and the USA, while secular rise is witnessed for Greece and Norway