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Using the Survey of Plant Capacity to Measure Capital Utilization

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  • Yuriy Gorodnichenko
  • Matthew Shapiro

Abstract

Most capital in the United States is idle much of the time. By some measures, the average workweek of capital in U.S. manufacturing is as low as 55 hours per 168 hour week. The level and variability of capital utilization has important implications for understanding both the level of production and its cyclical fluctuations. This paper investigates a number of issues relating to aggregation of capital utilization measures from the Survey of Plant Capacity and makes recommendations on expanding and improving the published statistics deriving from the Survey of Plant Capacity. The paper documents a number of facts about properties of capital utilization. First, after growing for decades, capital utilization started to fall in mid 1990s. Second, capital utilization is a useful predictor of changes in capacity utilization and other factors of production. Third, adjustment of productivity measures for variable capital utilization improves statistical and economic properties of these measures. Fourth, the paper constructs weights to aggregate firm level capital utilization rates to industry and economy level, which is the major enhancement to available data.

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File URL: ftp://ftp2.census.gov/ces/wp/2011/CES-WP-11-19.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 11-19.

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Length: 53 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:cen:wpaper:11-19

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References

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  1. Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
  2. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Working Papers 5125, National Bureau of Economic Research, Inc.
  3. Susanto Basu & John Fernald & Miles Kimball, 2004. "Are Technology Improvements Contractionary?," NBER Working Papers 10592, National Bureau of Economic Research, Inc.
  4. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers 88-2, Center for Economic Studies, U.S. Census Bureau.
  5. Matthew D. Shapiro, 1989. "Assessing the Federal Reserve's Measures of Capacity and Utilization," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 181-242.
  6. Betancourt,Roger R. & Clague,Christopher K., 2008. "Capital Utilization," Cambridge Books, Cambridge University Press, number 9780521070287, November.
  7. Ron S Jarmin & Javier Miranda, 2002. "The Longitudinal Business Database," Working Papers 02-17, Center for Economic Studies, U.S. Census Bureau.
  8. Foss, Murray F, 1981. "Long-Run Changes in the Workweek of Fixed Capital," American Economic Review, American Economic Association, vol. 71(2), pages 58-63, May.
  9. 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(2), pages 79-134.
  10. Susanto Basu, 1999. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," NBER Working Papers 5336, National Bureau of Economic Research, Inc.
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Cited by:
  1. Mark Bils & Peter J. Klenow & Benjamin A. Malin, 2012. "Testing for Keynesian Labor Demand," NBER Working Papers 18149, National Bureau of Economic Research, Inc.
  2. Mark Bils & Yongsung Chang & Sun-Bin Kim, 2014. "How Sticky Wages in Existing Jobs Can Affect Hiring," NBER Working Papers 19821, National Bureau of Economic Research, Inc.

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