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The role of profit margins in the adjustment to the COVID-19 shock

Author

Listed:
  • Hahn, Elke

Abstract

Profit margins are an integral part of domestic price setting and have had an impact on the response of euro area inflation to the COVID-19 shock. While profits have fallen more strongly during the COVID-19 crisis than during earlier recessions, profit margins have shown an unusually high degree of resilience relative to the depth of the recession. The resilience of profit margins likely reflects the normal resilience of profit margins observed in recessions and, in addition, the impact of job retention schemes. JEL Classification: E31

Suggested Citation

  • Hahn, Elke, 2021. "The role of profit margins in the adjustment to the COVID-19 shock," Economic Bulletin Boxes, European Central Bank, vol. 2.
    • Handle: RePEc:ecb:ecbbox:2021:0002:5
    Note: 854549
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/focus/2021/html/ecb.ebbox202102_05~cc3ed20c59.en.html
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    Citations

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    Cited by:

    1. Kameliya Savova, 2022. "Effects of COVID-19 in the Financial Statements for a Year of Global Pandemic – Evidence from Bulgaria," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 111-129.
    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

    COVID-19 crisis; Profit margins; recession;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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