The determinants of profits in Mexico and the United States: A theoretical and empirical reappraisal of Kalecki’s 1935 profits equation

Abstract

This study undertakes a reappraisal of Kalecki’s profit equation from a standpoint both theoretical and empirical. The analysis begins with a historical review of the determinants of profits within the Keynesian theoretical tradition. It subsequently revisits Kalecki’s formulation and, for the first time, articulates its relationship with sectoral balances—private, public, and external. The empirical component examines sectoral balance dynamics in the Mexican and U. S. economies and proceeds with an econometric estimation of the profit equation for both cases.