Technology, distribution, and long-run profit rate dynamics in the U.S. manufacturing sector, 1948-2011: evidence from a Vector Error Correction Model (VECM)
(2014) EKHM52 20141Department of Economic History
- Abstract
- The examination of the determining factors of long-run profitability in the manufacturing sector has been largely neglected in the literature. Existing studies either overlook the internal profit dynamics of the sector for the sake of international developments or do not go beyond the application of descriptive statistics. Starting from the theoretical concepts of Marx-biased technical change and the tendential fall in the rate of profit, we intend to fill this gap with the use of multivariate cointegration analysis. A Vector Error Correction Model using a time-series dataset that covers the entire postwar era is applied to test the long-run relationship between the rate of profit and a set of variables. The analysis is extended to... (More)
- The examination of the determining factors of long-run profitability in the manufacturing sector has been largely neglected in the literature. Existing studies either overlook the internal profit dynamics of the sector for the sake of international developments or do not go beyond the application of descriptive statistics. Starting from the theoretical concepts of Marx-biased technical change and the tendential fall in the rate of profit, we intend to fill this gap with the use of multivariate cointegration analysis. A Vector Error Correction Model using a time-series dataset that covers the entire postwar era is applied to test the long-run relationship between the rate of profit and a set of variables. The analysis is extended to capital-intensive and labour-intensive industries within manufacturing. We find one true long-run relationship between the set of variables in all models. Capital intensity is found to have a negative impact on the profit rate in all models tested, providing evidence for Marx-biased technical change. The effect of real wages is also negative in the models where a statistically significant contribution is established. Labour productivity has the largest positive effect in all models and is promoted as the decisive counteracting force to the negative burdens on the rate of profit. A secular declining trend in the rate of profit cannot be confirmed. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/4648167
- author
- Kalogerakos, Themistoklis LU
- supervisor
- organization
- course
- EKHM52 20141
- year
- 2014
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- U.S. manufacturing sector, technical change, capital accumulation, real wages, falling rate of profit, Marx, cointegration, VECM
- language
- English
- id
- 4648167
- date added to LUP
- 2014-10-09 09:02:29
- date last changed
- 2014-10-09 09:02:29
@misc{4648167,
abstract = {{The examination of the determining factors of long-run profitability in the manufacturing sector has been largely neglected in the literature. Existing studies either overlook the internal profit dynamics of the sector for the sake of international developments or do not go beyond the application of descriptive statistics. Starting from the theoretical concepts of Marx-biased technical change and the tendential fall in the rate of profit, we intend to fill this gap with the use of multivariate cointegration analysis. A Vector Error Correction Model using a time-series dataset that covers the entire postwar era is applied to test the long-run relationship between the rate of profit and a set of variables. The analysis is extended to capital-intensive and labour-intensive industries within manufacturing. We find one true long-run relationship between the set of variables in all models. Capital intensity is found to have a negative impact on the profit rate in all models tested, providing evidence for Marx-biased technical change. The effect of real wages is also negative in the models where a statistically significant contribution is established. Labour productivity has the largest positive effect in all models and is promoted as the decisive counteracting force to the negative burdens on the rate of profit. A secular declining trend in the rate of profit cannot be confirmed.}},
author = {{Kalogerakos, Themistoklis}},
language = {{eng}},
note = {{Student Paper}},
title = {{Technology, distribution, and long-run profit rate dynamics in the U.S. manufacturing sector, 1948-2011: evidence from a Vector Error Correction Model (VECM)}},
year = {{2014}},
}