Vol. 11 No. 4 (2025)
December

Articles

Greedflation in post-pandemic Europe: Analysing profit share dynamics

Published 2025-12-29

  • Agnieszka Drzewiej
    • ,
  • Mateusz Mierzejewski

Agnieszka Drzewiej
Krakow University of Economics

Mateusz Mierzejewski
Krakow University of Economics

Abstract

Objective: The study aims to examine how the profit share indicator (gross operating surplus as a share of value added in non-financial corporations) responded to macroeconomic shocks by comparing its dynamics during the post-pandemic crisis and the global financial crisis (GFC). By identifying deviations from expected trajectories, the study explores whether we can partially attribute corporate profit behaviour in the post-COVID period to mechanisms associated with greedflation.

Research Design & Methods: We studied the impact by examining the difference between the observed values of the profit share indicator during the crisis period and the values forecast using an autoregressive neural network model in a panel data framework. We utilised quarterly data from 16 countries covering the period from 1999 to 2023.

Findings: In many countries, particularly during the post-pandemic inflationary phase, the profit share indicator exceeded forecast values, often significantly. In contrast, deviations during the GFC were generally weaker or absent. The results reveal heterogeneous patterns of profit dynamics and suggest that in some cases, corporate profits may have contributed to inflationary persistence.

Implications & Recommendations: The findings suggest that inflation control strategies should consider not only supply and demand factors, but also profit-side mechanisms. Regulatory frameworks should monitor sectors where post-crisis profit margins increase disproportionately. Future policy design may benefit from incorporating profit-based indicators into inflation diagnostics, especially in periods of macroeconomic shock.

Contribution & Value Added: This study introduces a novel methodology for identifying potential greedflation effects by applying neural network forecasting to macro-level data. It avoids reliance on firm-level markup data while enabling empirical detection of abnormal profit behaviour. By comparing two major crisis episodes, the article provides a new perspective on the structural role of profits in shaping inflationary outcomes.

Keywords

greedflation, profit share, inflation, profit margin, GFC, post-pandemic crisis

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Author Biography

Agnieszka Drzewiej

Master’s degree in Economics (2023), Assistant in Department of Organization Development, College of Economics, Finance and Law, Krakow University of Economics. Her research interest includes sustainability management and labour market.

Mateusz Mierzejewski

PhD in Economics (2023, Krakow University of Economics, Poland); Assistant Professor at the Krakow University of Economics (Poland). His research interests include macroeconomic issues related to corporate finance, as well as fiscal and monetary policy.

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