ASSET PRICE CHANGES AND MACROECONOMIC MEASUREMENT OF PROFITABILITY

On the basis of national accounts data, this article compares two different measures for the profitability of non‐financial corporations, between France and the United States over the last two decades. The two measures differ in the way they evaluate the various elements that are integrated in the profitability calculation. The first measure corresponds to the usual practice which ignores the holding gains and losses on assets concerning some components of the profit measurements. In contrast, the second takes full account of these holding gains and losses on assets in corporations' returns. The analysis highlights in particular the effects on profitability measures of the huge variations in asset prices observed in recent years in the two countries. The main finding is that taking holding gains and losses into account actually matters for the measurement of corporate profitability over time, this result being particularly clear over the recent period.