s. The \"Permanent Profitability Hypothesis\" Consider a firm which solves the infinite horizon value maximization problem subject to uncertainty given by 'X; x 1 , t .' 1?: E D . y. Milka. ' (Hr) \" 5:0 5.L Df+,. : \"(hilt-x: \"(+3) 7 1H\" [\\It+.~+t :1r+.~ +(1 MK\"... Here. capital prices are normalized to be equal to the constant level PM = l. The firm's profit function takes the Cobb-Douglas form I'I(I\\',.,,:r},+,} : ri,+,,1\\',\"+, for all s 2 n, where '1 s 1. The uncertainty that the firm faces involves potential fluctuations in f}. with lt)g(fh+,,} = f) + EH\