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The commodities boom and the profit squeeze: output and profit cycles in Brazil (1996-2016)

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  • Guilherme Klein Martins
  • Fernando Rugitsky

Abstract

The aim of the present paper is to contribute to the understanding of the recent Brazilian crisis by arguing that it was related to a cyclical profit squeeze that took place between 2010 and 2014, following the long cyclical expansion that started in 2003. To do so, the cyclical trajectories of output and profit rates in the Brazilian economy, throughout the five business cycles that took place between 1996 and 2016, are examined by resorting to the part of the framework established by Weisskopf (1979) that focuses on cycles. The results indicate that profit squeezes are rare in the Brazilian economy, possibly due to the truncated character and the weakness of the business cycles’ expansions. However, a profit squeeze did took place in the last cycle partly as result of the commodities boom, which attenuated the foreign vulnerability of the economy and allowed for a longer than usual expansion.

Suggested Citation

  • Guilherme Klein Martins & Fernando Rugitsky, 2018. "The commodities boom and the profit squeeze: output and profit cycles in Brazil (1996-2016)," Working Papers, Department of Economics 2018_09, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2018wpecon09
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    File URL: http://www.repec.eae.fea.usp.br/documentos/Martins_Rugitsky_09WP.pdf
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    More about this item

    Keywords

    cyclical profit squeeze; Brazilian economy; profit rate decomposition; Weisskopf; structuralist Goodwin model;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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