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How do profits shape domestic price pressures in the euro area?

Author

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  • Hahn, Elke

Abstract

Profits can account for a significant part of domestic price formation and affect the pass-through of changes in costs to final prices. National accounts contain a broad measure of profits, gross operating surplus, which can tell us more about the role of profits for domestic price pressures, as measured in the GDP deflator. This box illustrates how profits have recently shaped domestic price pressures in the euro area. It explains which factors are the main drivers of the movements in profit margins and discusses how they have likely contributed to their recent developments. JEL Classification: E31, O11

Suggested Citation

  • Hahn, Elke, 2019. "How do profits shape domestic price pressures in the euro area?," Economic Bulletin Boxes, European Central Bank, vol. 6.
    • Handle: RePEc:ecb:ecbbox:2019:0006:6
    Note: 854549
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2019/html/ecb.ebbox201906_06~d32ee07ca9.en.html
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    Citations

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    Cited by:

    1. Martin Schneider, 2024. "What contributes to consumer price inflation? A novel decomposition framework with an application to Austria (Martin Schneider)," Working Papers 255, Oesterreichische Nationalbank (Austrian Central Bank).
    2. Heike Joebges & Camille Logeay, 2024. "Profits too high? Assessing inflation in the eurozone using wage and price rules for profit and unit labor costs based on national accounts data," FMM Working Paper 107-2024, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    Prices; Profit margins;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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