# Corporate profits (YNICPN)

## Changes to the FRB/US Model

Old model

    ynicpn - ynicpn_aerr = uynicp*(@recode(
    (ynin - yniln - yniin - ynisen - tfibn - tsibn + gfsubn + gssubn)
    >(tfcin + tscin + .01*xgdpn),
    ynin - yniln - yniin - ynisen - tfibn - tsibn + gfsubn + gssubn,
    tfcin + tscin + .01*xgdpn))

New model

    ynicpn - ynicpn_aerr = @recode((ynin - yniln - ynirn + uynicpnr*xgdpn)>(tcin + .01*xgdpn), (ynin - yniln - ynirn + uynicpnr*xgdpn), (tcin + .01*xgdpn))

    uynicpnr - uynicpnr_aerr = y_uynicpnr(1)*(1 - y_uynicpnr(2))
     + y_uynicpnr(2)*uynicpnr(-1)

## Some Details of the Simplifications

- The equation was simplified so that the dynamics of corporate profits are primarly determined by the difference between total income and the sum of the household labor and rental&proprietors’ income. The wedge between measured corporate income and the aformentioned difference is assumed to have a stable relationship with nominal GDP (XGDPN); their ratio, YNICPNR, follows a simple autogressive process.

- The following variables, which either did not have any feedback into or need in the model were eliminated:

  - YCSN: Net corporate cash flow with IVA and CCA
  - UYNICP: Multiplicative factor in YNICPN identity