The profit squeeze is supported by the PW cycle indicator

Abstract

This paper questions Van Lear's (1999) conclusion that the cyclical profit squeeze mechanism is irrelevant for understanding post World War II business cycles. It is shown that his conclusion erroneously emanates from either a misreading of the evidence or the application of an overly restrictive and irrelevant condition for the existence of a profit squeeze. It is concluded that Van Lear's data and other data in the literature support the cyclical profit squeeze as a viable explanation of post war cycles.