Private profit and public capital

Article Abstract:

The effect of public sector investment on the US profit rate is determined using sample data for the period 1958-1988. A profit rate is obtained from a three-input production function covering labor and public and private inputs. During the sample period, empirical estimates of the profit rate show the existence of a trend decline. Estimated regression results also indicate that public capital services, especially the state and local component, have a significantly positive effect on the profit rate. It is apparent that reduced public sector investment has resulted in a declining profit rate. To restore the profit rate and raise output, public investment levels must be increased.

Profit, Profits, Public investments, Return on investment, Rate of return

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Credibility effects of price controls in disinflation programs

Article Abstract:

A study was conducted to determine whether or not price controls enhance the credibility of an anti-inflation program. The results indicate that a partial price freeze can lead to inflation inertia. Policymakers may manipulate the optimal intensity of price controls to minimize policy loss from a discretionary monetary strategy. The optimal intensity of price controls is not zero only if the cost of imposing price ceilings is not too high, or if the price distortions in the policymaker's loss function is given small weight.

Administration of General Economic Programs, Price Levels, Methods, Economic policy, Inflation (Finance), Price control, Price regulations, Wage price policy, Inflation (Economics)

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