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Factor utilization and margins for adjusting output: evidence from manufacturing plants

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Author Info
Joe Mattey
Steven Strongin
Abstract

This paper describes patterns of factor utilization and output adjustment at the plant level for a wide range of manufacturing industries. We explain why manufacturing plants may differ quite a bit in how they accomplish output adjustments, depending on shutdown cost aspects of technology. Assembly-type operations with low shutdown costs would primarily vary the work period of the plant, whereas continuous processing plants with large shutdown costs would adjust instantaneous flow rates of production. For larger output increases, a lengthening of the work period by assemblers would entail employment changes, whereas continuous processors would be more apt to relax physical capital constraints. We use micro survey data on the organization of actual and capacity plant operations to describe the observed patterns of adjustment in individual manufacturing industries and find substantial heterogeneity across industries. For manufacturing as a whole, the work-week appears to be a significant margin of adjustment.

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File URL: http://www.sf.frb.org/econrsrch/econrev/97-2/3-17.pdf
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Publisher Info
Article provided by Federal Reserve Bank of San Francisco in its journal Economic Review.

Volume (Year): (1997)
Issue (Month): ()
Pages: 3-17
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:fip:fedfer:y:1997:p:3-17:n:2

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Related research
Keywords: Industrial capacity ; Productivity ; Manufactures;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Joe Mattey & Steve Strongin, 1995. "Factor utilization and margins for adjusting output: evidence from manufacturing plants," Finance and Economics Discussion Series 95-12, Board of Governors of the Federal Reserve System (U.S.).
  2. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital utilization and returns to scale," Working Paper Series, Macroeconomic Issues 95-5, Federal Reserve Bank of Chicago.
    Other versions:
  3. Maloney, Michael T & McCormick, Robert E, 1983. "A Theory of Cost and Intermittent Production," Journal of Business, University of Chicago Press, vol. 56(2), pages 139-53, April. [Downloadable!] (restricted)
  4. Bresnahan, Timothy F & Ramey, Valerie A, 1994. "Output Fluctuations at the Plant Level," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 593-624, August. [Downloadable!] (restricted)
    Other versions:
  5. Lawrence R. Klein, 1958. "The Measurement of Capacity," Cowles Foundation Discussion Papers 49, Cowles Foundation, Yale University. [Downloadable!]
  6. Mattey, Joe & ten Raa, Thijs, 1997. "Primary versus Secondary Production Techniques in U.S. Manufacturing," Review of Income and Wealth, Blackwell Publishing, vol. 43(4), pages 449-64, December.
  7. Matthew D. Shapiro, 1996. "Macroeconomic Implications of Variation in the Workweek of Capital," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-2), pages 79-134. [Downloadable!]
  8. Corrado, Carol & Mattey, Joe, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-67, Winter. [Downloadable!] (restricted)
  9. Ana M. Aizcorbe, 1994. "Plant shutdowns, compositional effects, and procyclical labor productivity: the stylized facts for auto assembly plants," Finance and Economics Discussion Series 94-13, Board of Governors of the Federal Reserve System (U.S.).
  10. Basu, Susanto, 1996. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 719-51, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Daniel Ryan, 2000. "Fluctuations in productivity growth rates and input utilization in U.S. manufacturing," Atlantic Economic Journal, International Atlantic Economic Society, vol. 28(2), pages 150-163, June. [Downloadable!] (restricted)
  2. Sustek, Roman, 2009. "Nonconvex Margins of Output Adjustment and Aggregate Fluctuations," MPRA Paper 17486, University Library of Munich, Germany. [Downloadable!]
  3. Andreas Hornstein, 2002. "Towards a theory of capacity utilization: shiftwork and the workweek of capital," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 65-86. [Downloadable!]
  4. Richard A. Miller, 2000. "Ten Cheaper Spades: Production Theory and Cost Curves in the Short Run," Journal of Economic Education, Helen Dwight Reid Foundation, vol. 31(2), pages 119-130. [Downloadable!]
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