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Factor Utilization and Adjusted Productivity Estimates for the UK

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  • Jens Larsen
  • Katharine Neiss
  • Fergal Shortall

Abstract

This paper derives series for capital utilization, labour effort and total factor productivity (TFP) for the UK from a general equilibrium model with variable utilization and labour adjustment costs. Capital utilization tracks survey‐based measures closely, but persistent movements in total hours worked mean our labour effort series is not as highly correlated with its comparators. Our estimated TFP series is less cyclical than the traditional Solow residual, although a weighted average of capital utilization and labour effort – aggregate factor utilization – and the Solow residual are not closely related.

Suggested Citation

  • Jens Larsen & Katharine Neiss & Fergal Shortall, 2007. "Factor Utilization and Adjusted Productivity Estimates for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(2), pages 245-269, April.
    • Handle: RePEc:bla:obuest:v:69:y:2007:i:2:p:245-269
    DOI: 10.1111/j.1468-0084.2006.00442.x
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    References listed on IDEAS

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    1. Jens Larsen & Katharine Neiss & Fergal Shortall, 2002. "Factor utilisation and productivity estimates for the United Kingdom," Bank of England working papers 162, Bank of England.
    2. Mark S Astley & Tony Yates, 1999. "Inflation and real disequilibria," Bank of England working papers 103, Bank of England.
    3. Susanto Basu & Miles S. Kimball, 1997. "Cyclical Productivity with Unobserved Input Variation," NBER Working Papers 5915, National Bureau of Economic Research, Inc.
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