IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/2004-49.html
   My bibliography  Save this paper

Estimating capacity utilization from survey data

Author

Abstract

In this paper, we review the history and concepts behind the Federal Reserve's measures of capacity and capacity utilization, summarize the methods used to construct the measures, and describe the principal source data for these measures--the Census Bureau's Survey of Plant Capacity. We show that the aggregate manufacturing utilization rate from the Survey of Plant Capacity does not exhibit the \"cyclical bias\" possessed by utilization rates from the less statistically rigorous utilization rate surveys previously used to estimate the Federal Reserve's measures. At the detailed industry level, utilization rates from the Survey of Plant Capacity for several industries do appear to possess a cyclical bias, but we demonstrate that this bias is removed in the construction of the Federal Reserve capacity measures. We further show that the Federal Reserve measures, by combining the Census survey utilization rates with other indicators of capacity, do not discard significant information contained in the Census rates. In fact, the Federal Reserve procedures add to the predictive content of the Census utilization rates in models of capital spending, capacity expansion, and changes in price inflation.

Suggested Citation

  • Norman J. Morin & John J. Stevens, 2004. "Estimating capacity utilization from survey data," Finance and Economics Discussion Series 2004-49, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2004-49
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/feds/2004/200449/200449abs.html
    Download Restriction: no
    File URL: http://www.federalreserve.gov/pubs/feds/2004/200449/200449pap.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. George L. Perry, 1973. "Capacity in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 701-742.
    3. Richard D. Raddock, 1990. "Recent developments in industrial capacity and utilization," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jun, pages 411-435.
    4. Carol Corrado & Joe Mattey, 1997. "Capacity Utilization," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 151-167, Winter.
    5. Lawrence R. Forest, 1979. "Capacity utilization: concepts and measurement," Staff Studies 105, Board of Governors of the Federal Reserve System (U.S.).
    6. anonymous, 1976. "New estimates of capacity utilization: manufacturing and materials," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Nov, pages 892-905.
    7. Carol Corrado & Charles E. Gilbert & Richard D. Raddock, 1997. "Industrial production and capacity utilization: historical revision and recent developments," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 83(Feb), pages 67-92, February.
    8. Frank De Leeuw, 1979. "Why capacity utilization rates differ," Staff Studies 105, Board of Governors of the Federal Reserve System (U.S.).
    9. J. Beaulieu & Joe Mattey, 1998. "The Workweek of Capital and Capital Utilization in Manufacturing," Journal of Productivity Analysis, Springer, vol. 10(2), pages 199-223, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Norman Morin & John J Stevens, 2005. "Diverging Measures of Capacity Utilization: An Explanation," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 40(4), pages 46-54, October.
    2. Gantert, Konstantin, 2022. "The impact of active aggregate demand on utilisation-adjusted TFP," IWH Discussion Papers 9/2022, Halle Institute for Economic Research (IWH).
    3. Michalis Nikiforos, 2012. "On the Utilization Controversy: A Theoretical and Empirical Discussion of the Kaleckian Model of Growth and Distribution," Economics Working Paper Archive wp_739, Levy Economics Institute.
    4. Lefteris Tsoulfidis & Theologos Dergiades, 2007. "Estimating Capacity Utilization Using a SVAR Model: An Application to the US and Canadian Economies," Economics Bulletin, AccessEcon, vol. 5(4), pages 1-12.
    5. Pascal Michaillat & Emmanuel Saez, 2015. "Aggregate Demand, Idle Time, and Unemployment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 507-569.
    6. Almut Balleer & Marvin Noeller, 2023. "Monetary Policy in the Presence of Supply Constraints: Evidence from German Firm-Level Data," CESifo Working Paper Series 10261, CESifo.
    7. Santiago J. Gahn, 2020. "Is there a decreasing trend in capacity utilisation in the US economy? Some new evidence," Working Papers PKWP2006, Post Keynesian Economics Society (PKES).
    8. Gantert, Konstantin, 2022. "The Impact of Active Aggregate Demand on Utilization-Adjusted TFP," VfS Annual Conference 2022 (Basel): Big Data in Economics 264103, Verein für Socialpolitik / German Economic Association.
    9. Michalis Nikiforos, 2011. "On the Desired Rate of Capacity Utilization," Working Papers 1116, New School for Social Research, Department of Economics.
    10. Christoph E. Boehm & Nitya Pandalai-Nayar, 2022. "Convex Supply Curves," American Economic Review, American Economic Association, vol. 112(12), pages 3941-3969, December.
    11. Theologos Dergiades & Lefteris Tsoulfidis, 2007. "A New Method For The Estimation Of Capacity Utilization: Theory And Empirical Evidence From 14 Eu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(4), pages 361-381, October.
    12. Nienke Oomes & Oksana Dynnikova, 2006. "The Utilization-Adjusted Output Gap: Is the Russian Economy Overheating?," IMF Working Papers 2006/068, International Monetary Fund.
    13. Dale Squires & Kathleen Segerson, 2022. "Capacity and Capacity Utilization in Production Economics," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 24, pages 1001-1037, Springer.
    14. Michalis Nikiforos, 2021. "Notes on the accumulation and utilization of capital: Some empirical issues," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 679-695, November.
    15. repec:ebl:ecbull:v:5:y:2007:i:4:p:1-12 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Sustek, Roman, 2009. "Nonconvex Margins of Output Adjustment and Aggregate Fluctuations," MPRA Paper 17486, University Library of Munich, Germany.
    3. Šustek, Roman, 2011. "Plant-level nonconvex output adjustment and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 400-414.
    4. Santiago J. Gahn, 2020. "Is there a decreasing trend in capacity utilisation in the US economy? Some new evidence," Working Papers PKWP2006, Post Keynesian Economics Society (PKES).
    5. Michalis Nikiforos, 2021. "Notes on the accumulation and utilization of capital: Some empirical issues," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 679-695, November.
    6. Yuriy Gorodnichenko & Matthew Shapiro, 2011. "Using the Survey of Plant Capacity to Measure Capital Utilization," Working Papers 11-19, Center for Economic Studies, U.S. Census Bureau.
    7. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302, National Bureau of Economic Research, Inc.
    8. Miles S. Kimball & John G. Fernald & Susanto Basu, 2006. "Are Technology Improvements Contractionary?," American Economic Review, American Economic Association, vol. 96(5), pages 1418-1448, December.
    9. Yoshida, Hiroyuki, 1999. "Harrod's Knife-Edge Reconsidered: An Application of the Hopf Bifurcation Theorem and Numerical Simulations," Journal of Macroeconomics, Elsevier, vol. 21(3), pages 537-562, July.
    10. Joe P. Mattey & Steven Strongin, 1997. "Factor utilization and margins for adjusting output: evidence from manufacturing plants," Economic Review, Federal Reserve Bank of San Francisco, pages 3-17.
    11. Wen, Yi, 1998. "Capacity Utilization under Increasing Returns to Scale," Journal of Economic Theory, Elsevier, vol. 81(1), pages 7-36, July.
    12. Federico Bassi, 2019. "Capacity Utilization and the NAIRCU," CEPN Working Papers hal-02360456, HAL.
    13. Federico Bassi, 2019. "Capacity Utilization and the NAIRCU - Evidences of Hysteresis in EU countries," CEPN Working Papers 2019-09, Centre d'Economie de l'Université de Paris Nord.
    14. Michalis Nikiforos, 2011. "On the Desired Rate of Capacity Utilization," Working Papers 1116, New School for Social Research, Department of Economics.
    15. Villa Stefania, 2012. "Capital Utilization and the Amplification Mechanism," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-22, September.
    16. Todd E. Clark, 1998. "Progress toward price stability : a 1997 inflation report," Economic Review, Federal Reserve Bank of Kansas City, vol. 83(Q I), pages 5-21.
    17. Basu, Susanto & Fernald, John G. & Shapiro, Matthew D., 2001. "Productivity growth in the 1990s: technology, utilization, or adjustment?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 117-165, December.
    18. Diego Romero-Avila & DIEGO ROMERO-ÁVILA & ILASKI BARAÑANO, 2012. "Long-Term Growth and Persistence with Endogenous Depreciation: Theory and Evidence," EcoMod2012 3757, EcoMod.
    19. Swanson Eric T, 2006. "The Relative Price and Relative Productivity Channels for Aggregate Fluctuations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-39, October.
    20. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.

    More about this item

    Keywords

    Industrial capacity; Statistical methods;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedgfe:2004-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ryan Wolfslayer ; Keisha Fournillier (email available below). General contact details of provider: https://edirc.repec.org/data/frbgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.